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 – April 2010
The month of April saw the ASX200 continue to march higher. The slow grind higher was not all that convincing as the relative strength index (RSI) was tracking into overbought territory. For this reason, we were reluctant to issue too many long positions. By the same token, we were also reluctant to recommend short trades as this would have resulted in trading against the underlying trend.
We entered long on Avoca Resources on the back of a number of bullish factors. Both the short and longer term trends on Avoca were upwards, the broader indices (i.e. ASX200, S&P500) were looking bullish and lastly spot gold was looking to breakout from the current consolidation to the upside. With three factors of confluence working in our favour, we were confident in recommending this trade. We closed out of this trade after four trading sessions to lock in a decent winner.
Closed Trades for April 2010
Portfolio Performance since 1 Dec 2008
Equity Chart since 1 Dec 2008
For the benefit of newer members, it is a good time to explain the Equity Chart above, 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 the 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 three 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 – April 2010
April was a tricky month to trade as we were seeing many internal signs of weakness from a technical perspective but the price action was still bullish as the extreme optimism that had been generated since the March 2009 lows was resulting in every slight dip being bought by the bulls. These dip buying rallies were not providing percentage moves large enough for us to capitalise on by trading the long side and they were still too vigorous for us to accurately place a stop on the short side.
We had one long trade on Reed Elsevier which we decided to cut our loss on quickly which in hindsight was a good decision. We then went short the FTSE 100 at 5,728 with a stop of 5,810. However, on Thursday the 22nd we saw yet another dip being bought with strength and decided to cover this trade, only for the market to capitulate soon after as the Greek crisis came to the forefront once again. We tried to re-enter this trade with different levels but were stopped out. Some members may have maintained the original trade parameters and captured a substantial gain. We unfortunately did not.
Closed Trades for April 2010
Portfolio Performance since 1 Dec 2008
Equity Chart since 1 Dec 2008
Global Markets – April 2010
Trading success was mixed in April, with four trades closed at a loss. However, adhering to strict risk management by only risking 1% capital per trade we were able to finish the month of April in the black, with a 1.20% return. Our long held long position on the S&P500 index rewarded us well, allowing us to pocket 89 points to return US$1,602.00 on the single trade.
As mentioned many times in the past, the Fat Prophets trading report emphasises on trend trading. We attempt to cut our losses quickly and hold onto the winners. The month of April demonstrated a good example of this from the ‘Closed Trades table’ below.
Closed Trades for April 2010
Portfolio Performance since 1 Dec 2008
Equity Chart from 1 Dec 2008
The Month Ahead
Looking forward to May we believe that the short term correction of recent could present some shorting opportunities in the near term. However, we will continue to analyse the price action should opportunities arise. It will likely be choppy and precarious due to the large amount of bulls still intent on buying dips. Both our long trades on gold are currently rewarding us well and we remain bullish on the longer term outlook of this commodity.
Prosperous Trading!