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.
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