Monday, October 14, 2013

The quest for consistency - Q3/2013 results

In my prior blog post almost 4 months ago, I commented at that time that I was profitable 6 out of the prior 7 months in my swing trading account.  Since that time, performance results have continued to remain consistent. 

Around that same time, I also made some changes to my swing trading.  I had a nearly forgotten IRA account at ETrade, and the account had been primarily in a money market fund making paltry < 1%/year.

But I was notified that the money market fund was shut down, thus leaving the account in all cash.  Well, at current money market yields where they are, being in all cash isn't much of a difference, but at least I was now "free" to trade in that account.

So I began actively swing trading my IRA account around the end of June. Here are some specifics of that account:
  1. Due to IRA status, it is a long only and cash based (no margin) account
  2. A steep $10/trade commissions. So that's $20/round trip, and even more when scaling out of a position.
  3. The starting balance was a little over $30k, so it larger than my prior swing trading account.
So how did I do swing trading that account, with a much less favorable commissions cost structure?  Given the conditions, respectable.  Here are my actual results:

Performance by month from

June - October 2013 statistics from

Trade distribution from
From the trade and account risk management perspective, my risk management was even more conservative than with the prior account:
  1. Except for a few dividend yield plays, my risk per trade was generally around 0.2% to 0.5% of my total account, often on the lower end of the range
  2. Position sizing per trade was generally < 5% of the total portfolio
  3. Total position leverage was on average < 50% but maxed out at around 85% for a short period
  • This swing trading method has worked for me over the past 10+ months, and appears to be process with which I can remain consistent.
  • However, a one year performance is nothing in the world of trading.  And I'm always wondering if the markets will change enough to negatively impact my future performance.
  • How would I do in a overall downtrending market, since I'm in a long only account?
  • Had I used a less conservative position sizing and/or more aggressive risk per trade, my returns could have conceivably been 2x higher.
  • How much can I really size up my trading before I run into growth limitations?
  • Commissions accounted nearly 25% of my gross profits (!!!), especially since my positions were usually small, only just a few hundred shares.  Had I used IB or TradeStation, my net returns would have been significantly higher.
  • Even with swing trading, I still fight revenge/rogue trading at times, but it's very infrequent compared to daytrading.  I realize that this challenge will likely never go away.
  • Trading with small risk per trade has been key.  I simply trade the solid setups, and follow the rules with little emotions.
  • My greatest challenge now is to stay motivated and to remain consistent with following my overall swing trading process. 
As my discretionary trading continues to improve, my trading time continues to get squeezed due to increasing family commitments. 

My main goal now is to work hard now to diversify my trading business so that by doing so, I gain more time for non-trading activities in the future.  I'm continuing to explore autotrading services, as well as ways to trade other methodologies and products.  I've also reignited the development of mechanical trading systems with some promising results.
It's a very interesting and exciting time for the retail trader, with tools and services currently available that most (especially me) could not have possibly imagined even 10 year ago. 


FX said...

Great that you have so much success lately. Thanks for sharing

Cameron said...

Great journal. I think you owe it to yourself to change your brokerage to a smaller commission. I was trading my Roth w/ optionsXpress but I jumped ship and went to OptionHouse instead. The money you are losing due to pricey commission is compounded many times over in a retirement account. The extra $10 or so you are paying RT will likely be worth +10x that in 10-20 years

Grove Under said...

Thanks for the comment, really appreciate it.

Thanks for your comment, you have a great point. I started trading the IRA as an experiment, but now when I see how much in "extra" commissions I've paid over just the past few months...ouch! You're absolutely correct, if I continue on this path, this will add up to huge unnecessary costs over time.

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