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 – November 2009
As evident from the table below, November was a quiet month of trading with two recommendations, FGL and CEY both long trades. Unfortunately, both trades were losers, thus at the end of the month, the capital loss was $3,585.12 in total. Our losing trade on CEY was rather unfortunate, as we were stopped out the day after the Dubai debacle, whereby most sector's lost between 3-6%. As trader's, capital preservation is paramount, thus the necessity of tight stops. This will at times result in drawdowns and losses, however, minimising losses and allowing profits to run is the strategy to 'trading longevity'.
Looking at the situation from another angle, overexposed traders to the long side pre the Dubai incident would have been in for a nasty surprise, experiencing much damage to their portfolio's.
Looking at the broader picture, our AU Equities performance was rather impressive to say the least.
After twelve months of trading, the Australian Equities account is currently sitting on a capital return of 44.47%, with a win rate of 58.23%.
This is quite a substantial outperformance when compared to our relative benchmarks over the same period of measurement, below :
1). Hedge Fund Market Directional benchmark : 27.21%.
Outperformance of 20.26%. Fat Prophets AU Equity Portfolio returned 44.47% vs Market Directional of 27.21%.
2). Hedge Fund Macro Index : -6.32%.
Outperformance of 50.79%. Fat Prophets AU Equity Portfolio returned 44.47% vs Market Directional of -6.32%.
Closed Trades for November 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
To reiterate, 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 the highest level our trading account has registered. We incurred a loss of $3,585.12 for the month, our equity line is down noticeably from the equity high line registered in early November. Fluctuations, in equity will always be part of every trader's life cycle. Like they say, 'you win some, and you lose some'. We can't be correct every time, but we can learn from our mistakes.
UK Equities – November 2009
Our UK Equities portfolio was also relatively light on trades during the month of November. As evident on the table below, we closed out two positions: one short on Halfords Group Plc (LSE: HFD) and one long on JKX Oil & Gas Plc (LSE: JKX). However, with the lack of direction in the markets we unfortunately yielded a negative return of GBP 866.23 or 4.07%.
Closed Trades for November 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
Global Markets – November 2009
After an active and impressive month in October, November was rather subdued. We recommended one long trade on Natural gas, only to see prices plummet against. Currently, what we are seeing with Natural Gas are 'Poor fundamentals' vs 'Bullish technicals'. This generally, is a receipt for a range bound gas market. Until confluence occurs between the fundamentals and technicals, it maybe some time before it is safe to re-enter this market.
After 12 months of trading, the Global markets account has returned 32.66% on capital, with a win rate of 72.73%.
Closed Trades for November 2009
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
The Month Ahead
Consolidation remains the major theme at present and as trend traders, this is not ideal. With many global indices trading towards the top of their ranges, the likelihood lays within an upward break and a continuation of the broader bullish trend. Nevertheless, with the US Dollar showing signs of weakening its downward trend, we cannot rule out a correction of some sorts over the coming weeks. In saying that, we believe a decisive break either to the upside or downside would bode well in terms of presenting a greater number of opportunities. A ranging market is not what we like to see, however, for now, we must remain patient.
Moving into December should see trading volume and liquidity decrease as most insto traders and fund managers look to take their early Christmas and New Year holidays. This being said, there will be trading opportunities out there. Possible shorting opportunities on gold are slowly emerging, as we may be entering the early stages of a minor pullback. In addition, the strengthening of the US dollar has also hit our radars, with potential currency trades ahead.
Prosperous Trading!