Trading results and conclusions 2017

Hi there. I want to show you my trading results for this year and tell about experience which I received. There is a saying: The cobbler always wears the worst shoes. In our business there  is a lot of mistrust to all who teach others how to trade. Because we don't know exactly is this person really has success in trading or just talk about. (see full video here: https://youtu.be/n-nzeHBnN20) 

 I was trading on real account on Russian market (MICEX exchange) during 9 months and right now I will show results and conclusions which I did during this period. This is my equity curve. As you can see I started with small sum about 300 000 rubles (equivalent 5200 USD) and during this year I invested once more than 700 000 rubles ( about 12100 USD) on this account. So my total investment was  one million and sixteen thousand rubles. It was about sixteen thousand three hundred dollars.

I chose MICEX Exchange for several reasons. Firstly this is real exchange, not a FOREX or CFD or something else. I can see my orders  in Order Flow and I don't trade against my broker. Secondly  futures here  have very small initial margin so I can trade a lot of instruments in the same time. 

I invested not so big sum and it was experimental account so for me more important was final result in percent and approving of my ideas. I traded mostly futures and options and rarely stocks. I used about 5 - 7 strategies in the same time and bet with a little size. And I like what I received because it was corresponded with my theory.

First of all I received very smooth curve without big drawdown. It's not  the biggest profit which I received, nevertheless  I think this  is the best result which I have ever had. I had much bigger profit in money and much bigger profit in percent.  But I have never had so consistent result.

Every month I had profit. Average profit was about 4-5%. At times  I had profit about 7-10% per month sometimes about zero. But in general I received 373 000 rubles (it’s about six thousand and four hundred dollars) or 37 % per 9 months or fifty three percent for the year.

Let’s check more in detail how I did it. If we check my performance report I have one-third more profitable positions than unprofitable ones. But my average profit trade is too small about two hundred and fifty rubles (it's about four dollars) and my loss is two hundred and ninety rubles or five dollars. I did a lot of trades about ten thousand. Because I know that only on big figures we can receive true result. 

My biggest drawdown was  13 416 rubles (it's about 250 USD) but it was part of my delta hedge in my option strategy. The biggest true drawdown was 7711 rubles (about one 130 dollars). The biggest profit was a bit less: 6328 RUB  (about 110 USD).

But usually my profits and my losses were much less. Now it looks unbelievable that I had average profit 4 dollars but eventually I made 6.4  thousand of profit. But answer is about 10 000 trades during about 150 working days (I didn't trade every days). When I trade it was about 50-100 trades per day.

I used scalping strategies, intraday position holding strategies. I traded several instruments in the same time. And in one of them I hold position during several seconds in another I was in position all day. I used diversification and my bets were small.

What I found out during this period? First one there is not any "the best strategy" (holy grail) which you could use everywhere. Every instrument has own character expressed in volatility, reaction on news, correlation with others similar and so on. What can be work good for one instrument  might be not useful for another one.

The second one - timing has very big influence. Input in trade before fast movement - this is real mastery. And vice versa to be in position before balance or whipsaw it's bigger risk to receive stop loss, you hold your initial margin, you can't trade other possibilities on this instrument and pay a lot of your attention sometimes without any result.

And the last one but the most important it's using of your money management. Usually traders don't account power of compound interest and power of big drawdown, and possibilities of big series of unsuccessful trades. And also in this case usually people underestimate the impact of psychology. But impact and pressing yours profits and losses on yourself could be very big.

What else? You should have a rational expectation from your trades and you should  be in agreement with it. And better to undervalue your skills than overestimate them. We often do unreasonable actions and should understand that we sometimes can't control ourself. It too difficult and sometimes useless to fight with our emotions so we should accept them and to make an amendment about them in the future.

I wish you good health (this is the most important), good profits, and be more happy!

Merry Christmas and Happy New Year!

Finally I did it. My book have done. This is a link for download: https://goo.gl/uqWkom

It will be interesting for beginer who want to know more about Volume analysis in tarding.

What prevents us from trading?

There are opinions that just several percents from all traders has constantly profit. All other 95-98% percents loose money or don't make profit. I think this opinion is wrong. Based on statistical datas of open tournaments traders, average percent is about 30% of winners and 70% of losers. But for much longer period amount of winners decrease and finally we can receive ratio 90% of loosers and just 10% winners. But if we check statistic for newly created companies, we also can see that about 80-90% will be closed during first 3-5 years. So this results is the same which we have in trading.  Let's imagine that somebody ask to be his partner and invest money in some business. For example hotel for pets. You didn't know before about how to manage of hotel and take care of the pets. But idea likes you and you decide to invest money and participate in it. You don't know exactly how it will be but intuitively you understand that you will spend a lot of money (or you have written business plan and have an idea how many do you need). Also you should spent some time to create your hotel.

But when we decide to trade on Exchange we decide that it's easy and we shouldn't have business plan, we can do not spent our time. We download some apps on our Iphone and during meeting try to trade EUR/USD or crude oil with expectation to make some bucks.

Let's compare 2 popular opinions (in general) if we trade or if we create Pet Hotel.

Pet Hotel.                                                         

I need a lot of money to create good Hotel.           

It's difficult to manage Hotel and take care of   pets                                                                              

I have spent a lot of time to receive good  results.                                                                         

I have to like animals and I have clean up after them.                                                                           

I must keep accounts and write down all  expenses and incomes.                                             

To make more money I have to invest more and  work hard. 

If I lost money I do something wrong.    I have to change something. 

Trading

It's not necessary to have big money to earn a lot.

It's easy to trade. Just click the button and  follow  by news and recomendations.

I can trade during lunch break and in the  evenings

I like to make money, I don't like to make   research, analysis and others stupid things

 I always can receive report from my broker. Why I have to do it?

To make more money I have to bet more.

If I lost money I will bet more money  next time. Or I will increase my positions.

We can continue on and on.  Opinions about trading is funny for us, are they not? But when we have separate opinion about trading - it looks serious. Hundreds percent per month - just follow us.  Download our apps and trade when you go at home by bus. These are popular advertising appeals sounds for me the same like: Purchase your personal a drilling rig and pump oil in the backyard at home. 

Trading it's serious profession, very nervous but well-paid when you are good specialist. You can earn money everywhere not only in trading. To trade good you have to love this profession and spend a lot of time and a lot of money to succed in it. What prevents us from trading? Our thoughts. Don't be a fool and turn on the brain. 

Comparing two kinds ETFs HYG - ETF of junk bonds and TLT - Long term treasury bonds.

In this picture there are 2 kinds of ETFs on bonds junk (white line) and treasure bonds (blue). If junk bonds is growing up it means that investors are ready for big risk and reward. And vice versa if growing up tresaures bonds it means that investors are avoiding risk. Current  prices on shares   puffed up like bubble. And we see that more and more invesorts are fixing profit and invest in treasures bonds.  

It means that they expect some correlation or down trend. Comparing this two ETFs is good indicators of courage of investors. 

How to increase your analysis on futures emini S&P (ES) and Nasdaq (NQ)

A lot of traders who trade ES and NQ are doing analysis of these instruments. But what if I say that they just follow by others instruments. In this article I'll share with you with some interesting information. Maybe I not pretend to be original but if you know futures and other derivatives have period of circulation with with average period of about 3 month. Sure that a lot of them have more long period. And  there are trading several contacts with different expiried date but with the one basic asset at the same time. But all liquidity is concentrating in the last contract. So despite intraday traders and short - terms speculators always have choice  usually thay use big liquidity in the last contract for active trading. But what about big players who need in long-terms goals for 6-12 months and longer? If they use in futures in their own purpose they receive several problem: 

• If big players use futures in long periods they have to pay extra price (in which include risk free rate) every time. Price of futures is different from  asset on risk-free rate. Because for purchasing futures you use just initial margin but not the full value. You can take a difference between full value and initial margin and put on  deposit  in your bank or you can buy risk free instruments (T-bond for example) and receive extra profit.To avoid this extra profit futures sellers include it in price of futures. Why futures mostly more expensive than assets and price of futures follow to assets price and in  day of expiration of futures both prices the same. For some instruments  price difference between  asset and  futures could be from 2% and more per year (it depend on interest rate of central bank, the higher the rate, the higher difference in price). So big players will lose money for overpay on long distance.
• The second problem is to open positions every time on new contract when old expire. If they have big position they pay  commission once more, and receive slipping during opening, or average price will worse then previous. All of it is addition risk what they want to reduce.

It's a delusion if I say that big players don't use futures. They do it. But for short-terms goals. For hedging, in combination with options and for any other reasons. But nature of futures as instruments is short-term goals. But there are some instruments that were made for long goals. And I will write about them. Some big players bet for the market in general. Thay can  use popular shares which are included in index Standard and Poor 500 or NASDAQ index. Or use ETF (Exchange Trades Funds. An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange).  If you trade emini S&P (ES)  you have to know about  ticker SPY. If you trade NQ you have to know about QQQ. Let's compare ES with SPY and check volumes and correlation between them.

This is 1 day correlation on 1 min bars. As you can see correlation enough big. On other days the correlation usually the same. Arbitrage trading do it.  Now, let's check day volumes on ES and on SPY. This is day volumes on ES. As you can see average volumes per day 1.5-2 Mio contracts. See picture below. 

At the same tame average volumes on SPY is 60-80 Mio contracts,  Despite it trades not whole day but only during pit session. Volume higher more than in 40 times. See picture below. 

This greater volume on the similar instrument indicate that bigger players are represented on SPY. Respectively they push price up and down by their actions and ES just follows by SPY. And despite that ES also has own volume and own's participants (and some of them are very big), ES just follows by SPY.  And the same situation with QQQ and NQ. NQ folows by QQQ. And if you really want to see original volume which can give you information about possibility of price movement you have to make analysis of ETFs during futures trading. This very short resume can save  your money when you will trade futures. 

I wish you more profit and less mistakes in trading!

Classical technical analysis vs Volumetrical analysis

      A lot of traders started trading on the market based on learning learning classical technical analysis. I am one of them. But when I used technical analysis I always doubt about accuracy of my levels.  A lot of traders recommend mutually exclusive rules how to construct them. And there are to subjective points of analysis when you use it. 

     When I started use volumetrical analysis I liked that there are less subjective points of view. And a lot of them different traders can see in the same way.If you know that level of volume of accumulation of the week is good for rebound of the price you will mark them. And there is just 1 exact level which can see any traders, without any "...of my opinion". Very clear and very accurate. 

For sure we can add other levels based on our opinion and based on our own strategy of working. But anyway a lot of them could be similar if you understand price behavior through volumetric analysis.

Below an example of video of Trader from Germany. He is trading  miniS&P contract (ES ticker) and use  Volfix. Look at his analysis and check it now. 

He was basically right with analysis of price development, but price delayed in a balance a bit longer.

He is good trader and is doing a good analysis. But I was surprised that despite I have other tactic of trading and I'm using less time-frame for trading I have the same levels and the same view. You can compare it. 

         But after I understood that if we have one instruments of analysis we can do the same things even don't know what are doing other side. I was passed a lot of trading courses but a lot of them was demonstration how somebody shows how he can trade. And a lot of practice was constructed on subjective opinion which was constructed by great experience in trading. But they  can't share by their brains. And can't explain it, because they see something more that you can't see. 

      In opposite with Volfix you can see the same because no other way to to mark weekly accumulation as for level when the biggest horizontal histogram shows it on our chart. Very clear and very accurate.

Price analysis vs real trading 

If you are good analyst it doesn't mean that you are a good trader. Always remember about it. To be a good trader not enough just understand well price behavior but you must use this knowledge for money making on your account. 

       There are two kind of traders. One of them is checking current situation and place most of trades intuitively. The other one do analysis before placing orders. I don't like to use discretionary trading because is too difficult explain why I did these or those trades after checking next day. For my opinion you can use intuitive trades after years of successful trading. It's like an artist which don't check proportions after huge experience in painting. But when you trade just several months and use initiative trading like base for your trading you are softly killing your account. Even if you have some profit this a question of time. 

       But problem is  that you could be absolutely correct with your analysis and wrong with your trading. Despite good analysis you received losses. Very familiar for a lot of trader. You did right analysis, and price go on by your scenario, but you are out of trade. Causes could be different: you have received stop losses, or wasn't your condition for opening position or you received few stops during volatile price behavior, or you hurried  up with entering. You have to check which cases have the most influence for your losses. And you must work with them. Identify them, understand why you did them, and avoid them in future trading. 

        If your analysis was good during long period before, there are no reasons to deny it when you are trading bad. The problem  could be not in analysis, the problem could be in your trading. You have to separate results of your analysis and results of your trading. And understand  where are you strong. And maybe you will be surprised that not always you did your trades based on your analysis, or despite bad analysis you did good trades. You will understand more when you will separately check results of your analysis and results of your trading. I'm sure you will received more clear answers about your trading and about your current results.

Yesterday i did several wrong trades despite I was right with total direction. 

       First of all I was too overconfident in my forecast. So I hurried with opening first trade. I didn't fix part of profits when I had possibility. Usually, I  fix part of my profit when price  move  in my direction. And third I wasn't lucky with third and forth entering. I received my daily limit stop loss (for my account it's 2%) for the first 30 minutes of trading. And I stopped trading. 

"Shit happens" as said Forrest Gump in movie. But always will be tomorrow. So be ready for good session. But if you afraid to receive losses even don't start the trading. 

P.S. Sometimes markets absolutely unpredictable, and all your scenarios could be wrong. It doesn't mean that you are a bad analyst (although it could be :) but it's means that sometimes predict price behavior is impossible. You should be ready for this when you put your on broker account.