Satuki @ Home

Definition of Solid Performance In Trading.

1 In a bull market, everyone is a “genius”, including my 90 year old grandmother. A good trader makes money in a bull market and avoids losing money in a bear market. Only great traders can make money in both markets. It is just so much harder to make money in a bear market since bear raids are too fast and furious for most people to react.

2 What does your equity curve look like? Do you have a lot of draw-downs? Do you know why Madoff conned so many people, including fund managers? Madoff was a genius. He offered people an anual return from 8-12% every year. Many novice traders might sniff at this kind of returns. But he did that every year no matter how the market behaved. Key is consistency here. A one year wonder means nothing. My grandma could step into the market at any moment, flip a coin and buy Drys at 5 dollars. It might be up 200% from there when she comes back next year. Is she a good trader? Also if you are up 50% this year and down 30% next year, it is bad performance. Your draw-downs are too big. You are much better off up 10% each year.

Now onto daily analysis of my trading. Day Trading is for my pocket money. My core positions are those swing trades. It was a beautiful day snice my positions moved in the direction I predicted. Thanks to David, he brought TNA to my attention, which is a triple leveraged small cap fund. It has a lot of volatility I like. So I day traded it with a Risk Reward Ratio of 1:4. It was a clean text book set-up. It broke out of a side-way trading range with vol. With a planned exit, it was a beautiful kill. There is no need to trade a lot. You would end up giving back a lot of your profits if you do. One shot and One kill is all it takes. Check it out on my tiwtter updates.

My Swing positions are doing very well too as we can see from My Portfolio. It was a shame that RIMM shook me out of my position and rallied hard. My stop loss for RIMM was perhaps a bit too narrow. I will look into it. Now let’s take a look at my last batch of swing trades, They are RIMM on 1/22/09, MOS on 1/21/2009 and WLT on 1/23/2009. RIMM was out at a loss of 174.99. MOS was out at a profit of 814.02 And I have a 10% paper profit on WLT. My target for WLT is 20% minimum. It is not hard to see the performance is pretty solid.

Click the pictures below to have a better view. 1s are where I opened my swing positions.

Now tell me if anyone entered a swing long in MOS around 2 and 3, thinking you were at less risk than me .

Now tell me if anyone entered a swing long in WLT around 2 and 3, thinking you were at less risk than me .

Now tell me if anyone entered a swing long in RIMM around 2 , 3 and 4, thinking you were at less risk than me .

I know that it takes a lot of courage. But you would make me really proud if you did. BTW, I will increase the size of my swing positions back to 10k each. I would have made 1700 on MOS.