As did many traders, I suffered my first significant drawdown over Tuesday’s trading which saw the Dow fall to it’s lowest price of 2012. Whilst a 7% drop in my equity (which equated to about £170 loss in monetary terms) was a bit of a kick in the teeth, it’s not the end of the world. Only a few weeks ago I was starting at a 19% return on investment and in recent weeks this had grown considerably to over 40%. Now looking at 32% after yesterdays falls i’m still relatively comfortable. Obviously taking a drawdown ‘after’ making some good profits is far more easier to take than going into negative equity from the start. It takes a lot more willpower to get out of that.
In terms of the actual stocks, my recent SHORTS that I opened in $MJN and $ROST rose against their SHORTING trends. This was just bad timing really. I’m not about predicting markets, I just follow the price and whilst this helps me bring in smaller yet consistent profits it also sometimes results in drawdowns caused by big news like yesterdays poor Q3 results from several businesses.
Looking at my overall portfolio i’m closing $EXR today after a close signal appeared. I’ve held it since 02/08/2012 at $33.12 and in that time it’s ranged between $32.92 and $34.84. Unfortunately my stop loss didn’t rise high enough to lock in any meaningful profits and i’ll be closing at breakeven. It’s my only casualty so far.
It terms of good performers I opened a SHORT position in the DAX yesterday and within a few hours it had moved 30 points in the right direction. Now the rules that I follow state that if a price moves immediately after your open and reaches a price you were not expecting in such a short time frame, grab your profits and close out. This may seem contradictory to the systems strict entry and exit signals, however I guess that rule is there for times when one needs to be ruthless. The aim afterall is to make money, and with all of yesterdays goings on, the volatility etc, and with my portfolio losing equity, it seemed to make sense to cash in and get out within the same day. This is the first time a stock has ever moved so fast after my purchase and I saw little point in holding the DAX overnight and risking those quick profits.
$HPQ and $NAT continued to fall yesterday despite several of my other SHORTS taking the opportunity to climb, so there were a few of my positions that continued their long term trends. These all served to limit the damage on my equity yesterday.
I still sit on a 32% return on investment (£565 profit) for the last 4 months which is a great result. If this falls further over the rest of the week then so be it. I’ll be back on the horse and picking the next trades that I hope will being me continued profits for the rest of 2012.