Ive kept my position sizing the same the entire journal as Ive been withdrawing most of my profits to enjoy life a little, snowboarding/surfing trips, other things. But this year Im going to really knuckle down in trading and re-invest my profits, increase size and let the positive effects of compounding begin.
I wish it were this simple, and unless I'm misunderstanding something here, this won't work. It is an increase of 18.18% in the ratio, but the profit won't fall out by multiplying that by one side of the leg. Am I missing something? WB
Let me give you an example; Long $10k ABC @ 100 Short $10k XYZ @ 181 Ratio = 0.55 Sold ABC @ 118 Covered XYZ @ 181 Ratio = 0.65 Profit on ABC = 18% ($1800) Profit on XYZ = 0% ($0) 0.65 / 0.55 = 1.1818
Hello Johnnysharp You are showing a profir of 18% but I think it is 9% because you need to calculate the profir on the TOTAL exposure that you have (both legs of the trade) since margin requirements for a PAIR TRADE are taken to be the 2 legs as independent trades.
Exited two trades; Sold MT @ 26.48 Covered SID @ 16.43 Sold ETE @ 18.80 Covered MGG @ 16.02 Entered two new trades; Long TMK @ 34.80 Short MET @ 33.27 Long SPN @ 16.59 Short NOV @ 28.95
Hi jonnysharp, I really appreciate your thread. thanks for your continued contributions. btw... what's your return on capital since last August (either the 5 or so months or annualized)? thanks, Walt
ROI = 64% since start of journal Annualized = 153% SP500 Outperformance = 102% since start of journal Also with less risk, exposure and volatility of SP500.
Jonnysharp, How are you managing the ANV/GRS trade since GRS took off? Do you have an uncle point or just stay in now that it is even more out of whack and you are well diversified anyway. I noticed GRS has had positive news in the last few weeks with positive earnings and an upgrade. Do you even take that into account, even though it is after the fact? Seems like it made a difference although in a delayed way. Also, you mentioned you trade equal dollar amounts. Does that mean you trade stocks with equal beta's or do you not use beta? Thanks, Scott