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 – June 2009
As usual, we begin the Monthly Wrap with a look at the Australian Equities account.
Keeping things short and sweet, from the nine trades during the month of June, six were winners; two lost us money, while One Steel (ASX: OST) was stopped out at breakeven (minus the brokerage).
In summary, we made $2,382.81 for the month, which gave us a monthly return of 3.79%. Although well below our return for May (9.41%), it was a positive number nonetheless.
To the overall trading account, and after seven months of trading, the Australian Equities account is currently sitting on a capital return of just over 30%, with a win rate of 67%. That is, 2 out of every 3 trades are making money.
Closed Trades for June 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
For the benefit of newer members, it is a good time to explain the Equity Chart below, which is a graphical representation of our trading results. The blue line is our equity line, and is updated every time a trade is closed out, while the pink line shows our equity maximum line. Put another way, this is highest level our trading account has registered. Although we posted a positive monthly return for June, as you can see, the account remains below our equity maximum line which was registered back in May. This is partly due to the current trading environment.
As a reminder, the aim of the Fat Prophets Trading Report is to identify short-term opportunities in trending markets, i.e., whether the direction is up or down, we need markets to be moving to make money. Even the savviest trader will struggle to make money in a sideways market!
As evident on the chart of the ASX200, from the March low, equities moved higher in a fairly calm and sustainable trend, during April and into May, from which time we have entered a period of choppy consolidation.
When observing this chart, and with an appreciation of our trading philosophy, it is not surprising that the account has been treading water over the past two months. In times like this, it is important to remain patient and disciplined. Over trading will only chew through capital and reward your broker.
UK Equities – June 2009
For the month of June, the UK equity portfolio was just as active as our Australian counterparts however, performance-wise, unfortunately struggled to keep up the pace.
To the numbers, after closing out ten positions, we yielded a negative return of GBP 1174.05, or -5.53%. Despite getting off to a good start by booking profits on Dragon Oil (LSE: DGO) and Cairn Energy (LSE: CNE) earlier on the month, a string of losses then followed which pushed our monthly return into the red.
On reflection, it can be seen that the FTSE100, UK’s leading index, broke out of its upward channel mid-way through the month and as all of our recommendations were ‘long’ at the time, this did not bode well for our positions. As a reminder, we were anticipating a break higher, above resistance at 4520.
Conversely, it is important to note that from a charting perspective, the blue-chip index did not trend sufficiently to the downside to present any clear-cut ‘shorting’ opportunities.
Closed Trades for June 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
Global Markets – June 2009
With the Global Markets account, we closed out two winning gold trades early in the month, followed shortly after by a loss on natural gas. We then finished the month with a small win on Copper for a total of four trades.
To the Account numbers, and the Global Markets account is currently running at a 73% win rate, and has an overall capital return of 18%.
As readers of our daily comment and watch lists would be aware, we view movements in the USD Index as crucial in forecasting the direction of many the other markets we follow, namely: currencies, commodities, and indices.
After trending lower during May, we again find ourselves directionless and in a range. Again, similar to the ASX200 and FTSE100, this type of price action is not conducive to trend trading. Nevertheless, when we get a break out, plenty of quality trading opportunities should arise. Currently, the highest probability remains for a break lower.
Closed Trades for June 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
The Month Ahead
Technically, we believe that the month of July will be a very important month, as it is likely to set the course for the rest of the year. The significance of July lies in the price action from previous months, in particular June. As keen market followers would be aware, nearly all the major markets ended June virtually unchanged.
This in turn means that buyers and sellers are equally matched. More importantly, this type of equilibrium in markets often occurs at the bottom or top of trends. However, a month of equilibrium on its own is not sufficient to produce a definitive forecast (that is a change in trend), we need July to confirm.
Given the importance of July for setting the course for the rest of the year, it is likely that both the global markets and equities account will have a quiet period of trading in the first half of July.
Happy Trading!