Thursday, January 2, 2014

2013 Trading Performance

I began taking detailed records of all my trades beginning in 2013 and thought I would share some of the results.  For each execution the vehicle, order number, filled price, and time to the nearest second were recorded.  The daily profit and losses were also noted.

I traded profitably in 2013 in both of the accounts I used to trade.  One is an account for short-term trading that I used throughout the entire year and the other is an account for longer-term trades that I funded and began using in July.  In these accounts I traded the S&P e-mini (ES) exclusively.  In the shorter-term account, the positions I had ranged from one contract to about three.  Positions reached 4 contracts only a few times.  In the longer-term account, the positions never exceeded two contracts.  Both accounts were used to open short and long positions.

The short-term account saw 239 long contracts opened and 225 short contracts opened.  13 contracts were opened long and 21 were opened short in the longer-term account.  This makes for a total of 252 long contracts opened and 246 short contracts opened.

The short-term account returned 188.5% or $14180.40 and the long-term account returned 87.0% or $8700.03.  The return between both of them was 130.5% or 22880.43.  These percentages are the values after commissions and fees.

Obviously a futures contract is a leveraged instrument in that the margin/performance bond requirement for a contract is much less than the actual value of the contract.  One could say my return was luck or I took on too much risk.  But when I traded, the positions I took on were within what I could handle emotionally.  Because I only planned on trading a few contracts at a time, I did not put more money at risk than I need.  So the account management was responsible.

Also I am obviously trading both sides of the market so there is a certain degree of protection every year from sell-offs and crashes.  Actually the expectation is to be able to generate a profitable return every year, no matter what happens.  But even in an up year like 2013, this protection did not seem to limit profits.  If I decided to not protect myself and just hold one contract long the entire year, I would have generated a lesser return.  So in a sense I "beat the market" in 2013.

But could the 2013 return have been luck? Nearly 500 contracts were opened between both of the accounts; 50.6% were long openings and 49.4% were short openings.  This is a good amount of volume, and suggests something more happening than randomness.  The long-term account saw 61.8% of its contracts opened short, a surprising number considering the account is designed for longer-term holds in a market that gained 29.6%, the best since 1997.  So the counter-tend short positions must have been managed well.

Since it seems risk was well-managed and the return was more than luck, perhaps the most important thing to take away is that the Elliott wave principle can be used to generate positive returns.  95% of what I use is the wave principle.  During the day I switch back and forth between blank charts of the e-mini and the S&P 500 with no labelings, markings, or technical indicators.  In the evenings, I go over everything with a fine-tooth comb and create the charts you see in this blog.  The research, done when my mind is clear of open positions fluctuating during the day, is something that I keep as a reference in my head during the trading day.

It takes more than good wave analysis to trade profitably however.  Each day I believe I either have an edge but feel skeptical about it, or see no advantage, sometimes to the point that I cannot imagine making money again!  It is this self-doubt that makes me hesitant to trade with only the single best option that I see.  Much of my success is owed to this mindset.

Self-doubt, when excessive, can also be crippling.  But not seeing possibilities and letting confidence get too high is far worse.  For two episodes lasting a few months each, I was victim to these emotions.  So I am hoping for better performance from myself in 2014 meaning that I want to maintain a good mindset.  I would rather lose money knowing I did the best I can than be given money by luck.

I wish everyone a happy and prosperous 2014, whatever the market brings!  Thank you for being such loyal readers of this blog of about four and a half years.  I hope I have brought you something educational over the years.

blog comments powered by Disqus