Final Summary (until next time)

Now that ANN is done and dusted, all the Trades opened in October are complete.  The results for October were...

I opened 10 Trades - 2 Wins and 8 Losses - Win Rate a meager 20%
Average win 0.20 R and average Loss 0.90 R
Expectancy was Negative 0.68

So October was practically as bad as a month could be.  I opened almost the maximum number of trades the system allows in one month and most of them lost practically the maximum loss.  The two winners made just enough money to buy a cheap lunch and a bottle of wine to drown my sorrows.

So what went wrong?  Surprisingly,  nothing went wrong!  These are the lumps and bumps of trading.  When the Index takes a nosedive any trend following system will manage to drag you into a few losers.  It was this phenomenon, and my desire to 'fix' it that kept me on the beginners cycle for many years.

Dave Landry, in his book 'The Layman's Guide to Trading Stocks' says that, the smarter you are, the harder trading is.  His premise is that professionals have a desire to get things right and can't accept that there can be periods where 80% of trades lose money.  All I can say is that, by that measure, I must be very smart.

These days I know full well that the solution to bad months is simply to keep going.  Soon enough a good month will come along and three or four winning trades will re-fill the coffers from the damage done by eight losers.

The overall performance of this system for the six months matched my expectations for that type of market

38 Trades - 15 wins and 23 Losses - Win rate 39.47%
Average win 1.70 R - Average loss 0.75 R - Win : Loss ration 2.27 : 1
Expectancy 0.22

I traded this with leverage of around 6 to 1 and in a period where the index only gained a little over 6 % I managed to increase my account by 18%.

I'm pretty happy with that and I intend trading this system again as soon as my personal circumstances allow.

 In the meantime I will build and give life to a new trading system from scratch right here on the world wide web.

Closed Trade : ANN

ANN was the last open trade in the KraB system and the numbers out of China yesterday were enough to slay this limping beast.

Chart Courtesy of www.IncredibleCharts.com
Click to enlarge

You can see from the chart that upward momentum didn't resume after I bought ANN and it became another loss management situation rather than the nice 'ignore the trade except for raising the target' ones that I prefer.

Summary for Trades Opened : November 2013

This system turned off in early November. It's important to remember that an on/off switch like this is not an attempt to predict the future. It merely keeps you out of the market during protracted down trends and lets you know when to get back in again. Sometimes it is very accurate while, at others, there will be whip-saws.

Chart Courtesy of www.IncredibleCharts.com
Click to enlarge

While in some methods the off signal is used to either bail out completely or tighten stops, that is not the case with my short term method. All it means is that I don't take any new positions.

In this instance I only opened 4 trades for November before the method switched off. The 4 are now all closed while I still have one live trade remaining that opened in October. This is why I am reporting November first.

So, in November

I opened 4 Trades – 2 wins and 2 losses – win rate 50%

Average win 2.29R average Loss 1.16R so win : Loss Ratio of 1.98 : 1

Expectancy 0.57

The October trades haven't been very profitable so far and I don't think the last trade will rescue them, but that is simply how trading works. One should never venture into this arena expecting a nice straight equity curve.

This is the distribution of returns for all trades except the lone open trade.  That trade is mildly in profit at the moment but going nowhere fast.  When it finally closes I will update this

The important thing to note here, is that even though the loss side of the distribution is far more crowded than the profit side, this period is profitable over all.  Trading isn't about picking winners so much as managing losers and leaving the winners alone to do their thing.  This is why trading is simple but it isn't easy.

Closed Trade : TGR

My rule for the stop Losses, is that it takes two closes below my stop to close a trade, but after 16 days I want to place a hard stop with the broker at the initial stop loss point from when I placed the trade.  Generally in a decent market any good trade will not hit that point after it has been running for 16 days, so it's just another way of weeding out the baddies.  TGR falls into the category of black hat wearing bad guys!

This trade can best be described as 'difficult'.  TGR was in a decent trend when I bought it, but the overall decline in the index dragged TGR into sideways action.  The day prior to having the hard stop placed with the broker TGR had a big decline.  

I placed my hard stop at the low of that day which was well below anything that might be considered optimal.   TGR then dragged along for a further month and a half or so but was positive enough that I was able to grind the hard stop up to the initial stop position.  This almost immediately tagged. Unfortunately by the time I allowed for the cost of carry, the loss was 1.22 R rather than 1.0 R

Chart courtesy of www.IncredibleCharts.com
click to enlarge

That was the last of the four trades I opened in November, so now I can calculate the November results.

I have just one trade open which I bought in October (ANN_AX).  I mentioned elsewhere that personal circumstances mean I can't continue trading this method at this time so I intend paper trading a fully disclosed trend trading model to continue the blog for the immediate future - watch this space!