Looking at the monthly chart above I had a lot of open equity in July and I gave a bit back. Around 12.5% - I can live with that. The results above also take into account all costs, tax payments, accounting fees etc, as well as any dividends and bank interest.
The closed trades equity curve, from January 2003 to present, above paints a different view and probably reinforces the idea that it is dangerous to count open profits as my own!
Monthly profits - again just looking at closed trades profits, although the September bar reflect open trades profits. This chart is the same way TradeSim plots monthly profits on simulations.
I sold a lot of stock last month whilst on holidays up north, not the most ideal spot to be trading. A couple of years ago I spent a month in Europe and didn't need to exit any trades. Trading weekly makes it a lot easier to go away for a few weeks. August 2007 however wasn't a good time to take a week off, but I did enjoy myself.
The main thing is that I followed the system, whilst I know of others that thought that they would wait till the price went up a bit before they got out, or worse still, they ignored the system! Both approaches leave me speechless. I give myself quite a bit of flexibility by using a weekly time period already, but to actually break my system rules is unthinkable.
I am reading "Way of the Turtle" by Curtis Faith and am pleasantly surprised that it is very readable, although I am only up to Chapter 3. Outcome bias is mentioned in Chapter 2 - the tendancy to judge a decision by it's outcome rather than by the quality of the decision at the time it was made. Holding on past the sell signal may have given a better outcome in hindsight but was the wrong thing to do in terms of following a trading system. I am sure that a lot of dot.com disciples that still hold some worthless dot.com company might, in hindsight, agree with me.
stevo
6 comments:
Hi stevo.
Great book that "way of the turtle".
As for breaking your system rules, thats like trading blind!
In your monthly profit chart (from TradeSim), arent the bars that go south meant to be in the red? Unless you have found a way to even profit from those!
Nizar.
Nizar
It's interesting how we interpret red for loss and green for gain. Maybe I should use aqua as a more "neutral" colour.
I spend a bit of time thinking about the best colour to use on charts.
stevo
Hi Steve,
Those charts (the first and second one) of cumulative monthly profit and closed trade equity curve, are they from amibroker or Excel or stockmaster?
How do you rate stockmaster as a portfolio management program? Does it hook up to data nicely?
Nizar.
Stockmaster is good for me because I balance my cashbook with it and it sorts out everything I need for tax purposes. This is the main reason I use it. I really do need to reconcile my bank account and trading records to ensure everthing is accounted for.
But it has very limited charting facilities. I can easily dump trades out of StockMaster into Excel to do the charts.
I download my data from Just Data and output to Metastock format and text format. StockMaster uses the text format files. I have to manually import although, once it's set up it's pretty easy.
Hi Steve,
Catching up on your 5 star blog.
Regarding your entry " ...I know of others that thought that they would wait till the price went up a bit before they got out, or worse still, they ignored the system! Both approaches leave me speechless."
I have not undertaken research, but would speculate that an asx weekly trading system would benefit by adopting some sort of filter or confirmation based on degree of movement of US weekly close, particularly if the movement is also likely to have flow on effect here due to nature and/or history of issue. 'Unique events' with likely outcomes for other exchanges occur on occassion. If by chance they happen to occur in US on Friday, you can be disadvantaged by sticking rigidly to your existing system rules, simply due to the time lag between two countries.
Just my thoughts and not intended as criticism in any way. Rather, a system enhancement/companion idea. I should endeavour to research it myself I know.
regards
Peter
It would be useful to explore since it is assumed that there is a high correlation between the world stock markets. I may already have looked at this back in 2002, but it would certainly be worth another look.
thanks
stevo
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