Hi All, I am starting a journal to document how well I can compare going forward to a system I developed. I am starting with $100K. I kept a journal here several years ago trading mostly stocks. I just recently got back into trading as I have been focusing on my career. This time around, I will be trading just a few broad leveraged index ETFs. I am keeping it to a few so that I can take every trade given by the system. My goal is to match the monthly percentages of the strategy. This way, I will know I am on track to meet the goal of nearly 30% average annual returns. Profits will be reinvested, so position size will grow as equity increases. Since 2009, the system has had a 40% draw down. So, I know I am putting myself out there to be ridiculed. To achieve above average returns, I feel you need to accept draw down. At least I have not discovered a way to avoid it. Besides, the system appears able to claw back in a relatively short amount of time. When I came back to ET, it was good to see some people still actively posting such as d08 and Scataphagos, who had posted in my prior journal. Feel free to follow along, chime in, and ask questions.
Since you stated that you have not been trading since you have been focusing on your career, what does the P&L chart represent. Is that the hypothetical results of the system that you developed? Props to you for posting posting your trades going forward. Not many here offer disclosure.
Hi eurusdzn, The etfs were fixed during the backtest. I selected a few etfs that would target different segments of the broad market. At times, some will be doing better than others. One thing I found is that after equity markets have sold off, they tend to rebound. Sure, there will be losses. I have to maintain a long term vision, and avoid getting caught up in the now. I debated whether to include a small cap etf as it had the largest draw down, but also provided the best return. In the end, I decided to include it to keep me engaged in the market by offering more signals, and to make the journal more interesting. I eliminated many etfs because their focus was too narrow (commodity, country, sector for example). They can get stuck in extended downtrends and were not suitable for my strategy. I don’t anticipate any of the etfs I have selected to underperform over the long term, so I won’t replace them. I don’t want to introduce any selection bias when going live after the backtest period.
Hi spindr0, The P&L chart represents the hypothetical performance for the backtesting period. I know it does not include 2008, but the etfs I am trading did not exist back then. I tried backtesting the strategy with SPY during the 2008 crisis. Multiplying the draw down I would have gotten trading SPY by the leverage I am currently using, I came up with a 51% expected DD. I know it sucks, but I am just a simple retail trader who doesn’t know any better. If that happens again, time to reload the account. No worries about anyone piggy backing my trades. I may need to just “catch the mega wave” between black swans to make this work. There may be some live calls and screen shots for entertainment purposes, but updating stats regularly will be my focus. I think many ETers really geek out on that stuff.
Rolan. Buy the dip has been a great strategy since 2009 but your a bit (8 years?) late to the game here. Like everyone else I have no idea where the next major bear market will come but it is always getting closer. Are you using leverage and trying to find the bottom of a dip or just buy more the lower it gets ?
You can accomplish that in under a Year, if you have the risk appetite for it -- and skill, strategy and to a lesser extent...luck. And all the other necessary building blocks, and ducks lined up, I would even have the gall as to so much as to say a Month...but you'd need a direct line to God for that perfect storm scenario playing out to your favor, When you compound, the sky is the limit for that atom bomb. -- But it's extremely rare for a trader to have everything in place for a healthy average gain, after average gain, on top of another average gain, Be a top 1% trader, or nothing at all. Or better yet, the top .10% of traders,...in the World, High-Five the Moon ...Make Being Elite Great Again 2018
you'll do well. No matter what, the markets are literally designed to go up over time. You're on the right side of the market when you only trade long. Buy dips and breakouts on the ES etc and i'll see you in a few years as 4k ES or so.
Hi Jakobsberg, I admit I am probably late to the game and missed out on a great run. January isn’t even a terribly good month for my strategy! I am not using margin, but the etfs are leveraged. So, no worries about margin calls. Some entries are lower, some are higher. I enjoy riding the market ups and downs. It is entertainment for me. Some go to Vegas. I made friends with “draw down”.