February Trading Recap – My First Negative Month
Well, I was actually surprised that February was a negative month for me. Not that I didn’t notice that I was having more losses than usual but because my trading and management style kept me from worrying about it. I had so many trades on, and all of such a small size in comparison to my overall account, all with various expiry ranging from one week to one month, adding new trades every week, that I never noticed my percentage for the month fell to 45%. That’s not good and I am not saying it is, what I am saying is that it doesn’t matter. My all time percentage is still above 55% and my percentage for the year is over 70%. A few managed losses doesn’t phase me. Plus, since then March has been pretty good. One thing also to keep in mind that at one point during the month I had close to 20 trades open at once. At $200 a pop that is equal to about 18% of total account value. At worst my drawn down during the month had my account around +12% from inception. So far in March my closed trades have me back up close to 25% on a realized basis and close to 40% including the cost of open trades.
One of the things affecting February trading was expiry. Because of the taper, the FOMC, data etc correction was the name of the game so I was trading longer term expiry in order to allow the trades time to work. Most of them did, just not in February. At the end of the month there were 15 trades still open, just like at the end of beginning of February there were still eleven open trades from January. So, 20 closed trades in February, 11 trades carried over into February from January, 15 trades carry over into March. Of the 20 closed in February there were only 9 winners for a 45% win/loss ratio and, surprisingly, a smaller loss than I expected. Why, because of the break down of trades. I began to make trades of $200 in January, double my usual $100 trade amount. Trades of both sizes closed in February, 15 for $200 and only 5 for $100. I had better profitability in the $200 trades, offsetting net losses for the month. The cost of trading was $3500 with a return of $3145 for a net loss of ($355).
Total Cost Of Trading = -$3500
Total Return On Winners = $+3145
Net Profit/Loss = -$355( -10% return of investment)
Tips In February
There were four Monday’s in February and four weeks of tips. This means 20 trades for the Geek account, I made no extra trades last month. I used quite a few one month expiry’s this month as well so there were still 15 trades open at the start of March. Since then the market has bounced and I have adjusted my expiry.
Week One, 2/3/2014 – I traded a put on the S&P 500 with a one week expiry. The index was was moving toward the long term trend line. This trade closed out of the money. I made one of my last trades on the euro, a put, it did not close in the money. A put on gold also did not work as global economics helped to support higher prices. I made a call on the USD/JPY that did work, the one month expiry was crucial for this trade. A call on Apple was also profitable.
Week Two, 2/10/2014 – Week two of the month was a little better, I profited from three of those trades. The one month call on the SPX paid off nicely as did the one on the yen and a one week call on the Oil ETF. A put on the EUR/USD helped to cement my decision to quit the euro/usd and another failed put on gold led to switching my near term outlook to bullish.
Week Three, 2/17/2014 – Week Three was the best so far with a 80% success rate. 4 out of 5 trades closed in the money, all with one week expiry so this is the week that helped to rescue the month from serious losses. The only trade was a call on JP Morgan. The stock gave off a strong signal that took a week longer than expected to produce a winner. Don’t worry, I made up for this loss on a later trade. Calls on the SPX, DAX, USD/JPY and Gold were all winners.
Week Four – Week Four was another lousy week, and unfortunately for March, a week in which all trades closed in the next month. Calls on Gold and Oil were profitable but those on the SPX, USD/JPY and JPM failed to produce.