Brief update for the week- Stuck to strategy, finished the week down about 1.2%. Not bad versus the broader market, which was down nearly 4%. However, i still lost money. Key to the strategy is to minimize losses on down swings, and amplify gains when the market is going up. So, with that in mind, i'll take last weeks performance, even though i lost a bit. Status for the year: up 6%.
The last two weeks have been hectic, to say the least. I am up about 1% during the two week period, with a 6% drawdown in the interim. Looks like the S&P is about flat over the same period, with a similar drawdown, so I slightly outperformed the benchmark. However, I made some stupid mistakes in how i managed my hedges....I should have made 4%+ during the period. Biggest challenge I have at this moment is staying patient...I need to wait until i think a trade looks pretty good, and then wait 2 - 3 days longer. I literally seem to be early by about 2 days in general. Anyway, my new strategy is heavily long biased, so the fact that I made 1% and beat the benchmark during a pretty volatile period is still not bad. Not as good as making 10% per week trading CL, but also a 5% drawdown is a lot easier to stomach. I am slightly long-biased going into earnings season, but heavily hedged and my downside risk is very limited. In fact, I am almost in a straddle position, where I will probably profit a bit on a major market move in either direction.
Made about 1% last week versus market losing about 1%-2%. Not bad. But, I lost 3% on Friday, so was having a much better week. I was being cheap and trying to make it until Monday to re-hedge my long positions. I hate buying next months PUTS on the day or two before OE, however this is the third time i've been ape-raped trying to skirt until Monday to buy hedges. Never again. I lost the full cost of a months worth of hedges on Friday. Anyway, still, I am beating the market and still profitable on the year thus far, so I am proceeding according to plan. But, some simple mistakes have caused me to leave a LOT of money on the table. S'ok....I don't mind learning the hard way as long as I stay profitable.
I forgot to mention I am now assuming an incredibly short bias....my portfolio last week looked like this: 50% Emerging Markets 50% QQQQs 50% TLT 15% VXX 5% hedges on long positions On Monday, im closing my QQQQ and emerigng market long positions and moving to cash. I'm holding my hedges as outright short positions. I'll start scaling into long index positions again at 1000 and down to 950. Or, if we break above the 45 week MA. If the market moves north violently I will seriously start to underperform the benchmarks, but I will stay mildly profitable on the year.
I mean no disrespect, but profitable you ain't because it sounds more like you were the beneficiary of dumb luck. Unfortunately, dumb luck does not strike twice. You need to have a specific plan and trade accordingly--win or lose. I much rather lose in a controlled manner than to win haphazardly.
No disrespect taken, and i appreciate being challenged and appropriate criticism. One might argue I was up 85% earlier this year on dumb luck, and thats why i lost it all. However, I believe I had a decent trading strategy but psychologically crumbled during severely adverse market conditions when my attention was not adequately focused. In any case, I've abandoned all that. I am now and have been for several weeks following a very well defined plan and have been sticking to it. There is a discretionary component but it only applies to 25% of my trading capital. My goals with this new, well defined trading strategy are simply to outperform the broad S&P index and also to end the year profitably. I know for a fact I won't make enough money on the strategy I'm following to make a career out of it, but I've chosen this strategy because it will teach me (hopefully) airtight discipline at a lower risk level, and because I think it fits properly with the amount of focus I can currently deliver to trading during market hours. If i execute this strategy successfully this year and next, I will most likely revisit a far more active trading approach (but there are several life changes that need to fall into place first). I'm only up 8% by the way....not exactly killing it
Closed all index positions today plus a TNA swing trade. Decent day, but only made about .75%. Slightly better than the broad benchmark However, I am now net short. Not balls to the wall, but Ive got a 3% risk short trade on, 4 week horizon. Its clear to me that the market will be down 10% in short order. There are three obvious factors: 1) severely deteriorating macro econ picture 2) some earnings beats, but REVS are missing consistantly. BAD FOR GUIDANCE, and thats what matters 3) lesser quality companies will start guiding lower during upcoming earnings (next two weeks) My game plan is to start scaling in at 1020 and down to 950. I'll hedge there, and look for a Q4 rally. But, above and beyond all, I will protect capital. We are in a fucked market. I might start selling puts on dividend paying companies to generate income and maybe get some solid companies at good prices. Oh, and DecisionMoose has me 25% in TLT....so far so good with DecisionMoose.
Finished the week up around 2% or so. A little worse than the markets did, but I had almost no exposure whatsoever. I executed brilliantly. And that is more important than the 1% underperformance to the broad indexes. On monday, my system has me going long emerging markets and the QQQQs again. With the market seeming a bit overbought, i'll start those positions hedged, and see what happens. I'm up 8% on the year, versus -1% or whatever for the broad indexes. I think i will finish the year up 20%. Anyone want a piece of that action? Remember my promise from an earlier page -- if i end the year in the negative, I will give up. GIVE UP. Won't happen though. Mark my words.
By the way, my risk adjusted return last week was probably 50%. I literally had almost no exposure and still pulled in 2%. Next week will be a different story....I'll have 150% exposure. (with hedges)