Trading With The Geek Recap – 4.5% Return is Good for Me!
A volatile market made longer term trading difficult, but provided plenty of opportunity for short term trades and they are what saved me, read here to find out how.
August was yet another tough month. Global woe has been hurting the market and caused a lot of volatility. It was almost impossible to predict market movement from one day to the next as headline after headline sent trader sentiment spinning. China may have been the most influential headlines as the PBOC added several new twists to QE and made repeated attempts to to prop up their financial markets. Even so, economic data from around the world, earnings and speculation over the upcoming FOMC interest rate tightening cycle all played their parts as well. Currency markets may have been the most heavily impacted but the carnage was not limited to forex as shifting values sent assets from commodities to stocks to indices into safety mode.
Total Cost Of Trading = $15,000
Total Return On Investment = $15,725
Return On Investment = 4.5%
There were a total of 5 Monday’s in the month which equals 25 trades. To be honest, I only came out at break even on those trades but I was fortunate enough to recognize the increasingly volatile nature of the market and capitalize on several short term trades. All told I made 31 tips and short term trades with an overall winning ratio of 57% (it would have been 55.5% but I missed my entry on gold the week of 8/10). My total cost of trading was $15,000, my total return was $15,725 resulting in a net profit of $725. This isn’t a lot I know, but it is a positive month, increases my total account balance and will lead me to increase my overall trade size in the next month. As a point of reference, my account has grown more than 60% from last summer and now totals more than $20,000.
July Was A Hot Month For Volatility, August Got Hotter
Week One 8/3/2015
This week earnings were still the name of the game but other factors were also at play. Earnings were strong and economic data was also strong, but the market was facing resistance in the form of global woes that turned out to be strong enough to send the market into the beginnings of correction. It took a few more weeks for full correction to form but my bullish trades on the indices did not work at all the way I was expecting. However, on the flipside, the currency market was a little more predictable and allowed me to to profit on EUR/USD and USD/JPY trade. Also of note, oil prices began to slide from the $50 level and I profited on that as well (I’d been predicting this drop for at least a couple of weeks by then). This week’s tips resulted in 3 wins and 2 losses.
Week Two 8/10/2015
This week the market was still looking like it was gearing up for rally. Earnings season was just about over, economic trends in the US were positive and the previous week’s weakness in the equity markets was offering up an even better entry than before. I played a call on the SPX and won it, and a put on the USO, and won that because supply/demand outlook was decidedly bearish. Unfortunately this was one of the weeks in which China adjusted the mid-point for the yuan so currency market were in turmoil and that affected my trades on the Euro, the Yen and on commodities tied to the dollar, basically I lost on the EUR/USD, the USD/JPY and gold.
Week Three 8/17/2015
This week I got really mad at China. The market manipulating communist government made yet another move with its currency, along with moves to support the equities markets, and sent the world into free fall. This was one of my worst weeks for tips, but also set me up to start taking advantage of market volatility as one wild swing led to another. I profited on gold, the flight to safety trade was irresistible, my trade on the USO was also good because supply/demand outlook had still not changed, but my trades on the dollar and the SPX all turned to crap.
Week Four 8/24/2015
This was my worst week for tips and the real inspiration for my short term trading. The market began to tank, driven on what I will call “overnight” news, that is, news that occurred between the close of trading on one day and before the open of trading the next (on the US markets), primarily from China, some from Europe. On a day to day basis there was no telling if the market would be up a full percent, or down a full percent, at the start of the next day. I only won one of my tips but I entered 4 short term trades playing on early morning momentum and won them all.
Week Five 8/31/2015
This week things started to turn around. The market sell-off began to find bottom, currencies began to stabilize and China was thankfully absent from the headlines. I profited on 3 of my 5 tips, along with another win on my short term trades. Volatility may continue into September but it is starting to dissipate… so long as economic trends remain stable and earnings outlook remains positive, the bull market should continue from here, after it finishes consolidating.