CFD Trading Report Monthly Wrap, a detailed look at where we made and lost money during the month.
In an attempt to improve our service, we will now report our performance on a monthly basis, dividing our trades into three portfolios, Australian Stocks, UK Stocks, and Global Markets, which comprises commodities, currencies, bonds, and US indices. Going forward, we will report overall portfolio results for each of the three trading accounts, each in their home currency, AUD, GBP, and USD.
For each trading portfolio, we will provide
- A table of the closed trades from the month, with a combined Profit and Loss (P/L)
- A Portfolio Performance Table. The information in this table is rolling, i.e. the trades for the month are added to this table on a continuous basis. This table contains trades that were opened after 1 Dec 2008.
Below are a few notes which provide further explanation.
Current Account Balance – includes all closed trades from 1 Dec 2008 to the current month end
Overall Return – Total P/L to date, as a percentage of our starting balance
Win % - Percentage of trades where we book a profit
Scratched Trades – Trades where we were stopped out at break even
Max % Drawdown – This is the maximum amount, in percentage terms, in which our account decreases from our maximum equity line. Graphically, it is the maximum distance between our Maximum Equity (Pink) Line and our Current Account Balance (Blue) Line in the chart below.
AU Equities – May 2009
We were quite active in the Australian equity market during the month of May, closing out sixteen trades in total. Out of these sixteen trades, we booked nine winning trades, six losing trades, while one trade was stopped out at breakeven.
Arrow Energy (ASX: AOE) was clearly a standout performer. We opened a total of 4 positions in this stock, amassing quite a holding, before prices reached our target at $3.72 early in the month. This is a good example of when a trend following system works well. Prices would break higher, and then consolidate, before again moving upwards. We entered subsequent positions as the trend unfolded.
From the losing side of the ledger, Santos (ASX: STO) was clearly disappointing, with the Company announcing a heavily discounted rights issue shortly after we entered the trade. This is a good example of where a stop loss is only a theoretically exit level. We exited the stock on the open at $15, which was well below our initial stop of $15.90. As a result, we lost 3.18% of our trading capital, instead of our predetermined 2%. The lesson here is to trade appropriate volume. Even though we lost much more then we would have liked, the trade didn’t have a significant impact on the account.
Never let one bad trade wipe out your trading capital!
In summary, we made $5,409.40 for the month, which in percentage terms was a return of 9.41%. Our best month year to date!
To the overall trading account, and after six months of trading, the Australian Equities account is currently sitting on a capital return of just over 25%, with a win rate of 64%. On the negative side, after booking quite a few losing trades towards the end of the month, we finished with our largest account drawdown of close to 8%.
Closed Trades for May 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
UK Equities – May 2009
We were slightly less active in the UK in comparison to our Australian Equities account, closing out only seven positions for the month of May. From an accounting perspective, we unfortunately yielded a negative return of GBP 1306.06, or - 5.79% however, we believe that this does not tell the full story.
With regards to our position on DNX, that recommendation was essentially scratched, meaning that we were stopped out at breakeven, minus brokerage fees. Whilst we understand that losses are an inevitable part of trading, we also know that occasionally luck, whether good or bad also plays a part. The latter was certainly the case with respect to both legs of our AMEC trades.
Consider Amec Plc (AMEC)
We opened a long position in AMEC at 601p as prices broke-out above previous resistance. The stock initially rallied before trading sideways for a short period. On the 20th May, the Company’s share price suddenly experienced a sharp sell-off down to a low of 606p, triggering our stop loss at 619p. We can only describe this move as a ‘bad tick’ as prices stayed there for just a second, with minimum volume going through. Looking at the chart of AMEC now, our analysis proved to be correct, as prices continued its upward trend trading to a high of 716.50p, just shy of our original target.
Notwithstanding, we continue to work hard to return the UK Equity account back into positive equity.
Closed Trades for May 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
Global Markets – May 2009
With the Global Markets account, a declining US Dollar produced several quality trading opportunities, of which we participated in two, Crude Oil, and the GBP/USD. As evident on the table below, we booked profits on both trades, totalling a gain of US$743 for the month.
From an accounting perspective, the Global Markets has produced a capital return of 15.57% over the past six months, with a win rate of 73%. Encouragingly, the maximum equity drawdown on this account remains very low at 4.78%.
Closed Trades for May 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
The Month Ahead
With equity markets continuing to grind higher, we will again be looking at buying opportunities more so than short trades. And while we will not limit ourselves to one sector in particular, commodity stocks continue to present solid opportunities.
On Global Markets, the US Dollar remains under pressure, this is producing trending markets in Gold, Oil and Copper. The recent downwards pressure in the US 10Yr Bond and Eurodollar markets, is something that we are keeping a very close eye on. Falling bond prices means yields are rising. We are keenly aware of what opportunities a rising interest rate/ inflationary environment will produce, namely commodity price strength. So stay tunned for further buying opportunities in these markets.
Happy trading!