CFD Trading Report Monthly Wrap, a detailed look at where we made and lost money during the month. We report our performance on a monthly basis, dividing our trades into three portfolios, Australian Stocks, UK Stocks, and Global Markets, which comprise commodities, currencies, bonds, and US indices. We 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 – January 2010
What a way to start the New Year. The ASX200 shed 301 points or -6.18%, but more importantly is showing signs of a weakening uptrend which started in March 2009 as evident on the daily chart below:
Keeping things short and sweet, from the seven trades closed during the month of January, four were winners and three lost us money.
In summary, despite the horrid month on the ASX200 we still managed to pick more winners than losers, by minimising our losses, we ended the month down only -1.08% or -$770.10.
Looking at the broader picture, our AU Equities performance remains impressive, with the following performance returns.
Since inception, the Australian Equities account is currently sitting on a capital return of 41.45%, with a winning strike rate of 57.47%.
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: 29.57%.
Outperformance of 11.88%.
2). Hedge Fund Macro Index: -10.62%.
Outperformance of 52.07%.
Closed Trades for January 2010
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.
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!
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 – January 2010
January was a tricky trading month for trend trading the UK market. The month started with a surge higher through resistance as the index broke its long term downtrend that had been in existence since the 2007 top. This move saw two of our short positions DOM and RMV stopped out. The upside was that it looked like we had finally broken out of the tight trading range that had been in existence for the past three months. The trend appeared to be up and we positioned our recommendations accordingly only for the market to quickly reverse and sell off sharply.
We managed to minimise the damage to our capital by quickly adjusting our stop levels and adding some short positions. As a result we managed to contain our downside risk well suffering only one more loss - FXPO. We managed to book some small gains on BATS and SSE and had a quick winner on the short BARC trade to finish only slightly down on the month.
Closed Trades for January 2010
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
Global Markets – January 2010
Most global indices got slaughtered this month falling between 3 - 6%. The technicals indicate a switch in trend in the short term to the downside.
The Global Markets portfolio closed four trades this month, three costing us capital and one winner. Due to the choppiness of the global markets, we were stopped out of our Crude Oil contracts and Natural Gas. Towards the end of the month, we made a small profit on the EUR/USD.
Since inception, the Global markets portfolio has returned 25.84% on capital, with a winning strike rate of 65.85%.
Closed Trades for January 2010
Portfolio Performance from 1 Dec 2008
Equity Chart from 1 Dec 2008
The Month Ahead
Looking forward to February we expect the correction to continue and believe that the move lower will finally provide us with a trend that we can capitalise on with some short trade recommendations. We will still be managing our positions closely, trailing stops and protecting our capital. Following such an extended move to the upside as we had during 2009 the bulls are still in control and we expect some swift sharp counter trend moves to the upside. There is definitely a trend to be played but it must be approached with caution.
Prosperous Trading!