Here are the trades that I put on and closed in 2011. I closed a total of 18 trades of which 14 were profitable and 4 lost money. Notice that even though I had 14 winners and 4 losers, the portfolio just broke even. This mainly has to do with the reward/risk ratios of the trades. That means in general, this strategy has to be successful roughly 4 times more often than unsuccessful. Notice though that in all losing trades they never lost more than 2% of the portfolio value, which is around $17,000. The secret is good money management, one of three critical aspects to successful trading.
|11/12/2010||Call Diagonal Spread (GLD)||$428||$13||This trade could have been a lot worse given the turn around in gold but should have been better due to poor execution.|
|12/10/2010||Call Vertical Spread (DIA)||$264||- $252||My first loss of this year is actually due to a mistake made a few weeks ago|
|12/21/2010||Put Vertical Spread (XLE)||$64||$70||This trade turned out as expected - in fact a little better as I got a better fill price on the close of the position.|
|1/26/2011||Put Vertical Spread (IWM)||$68||$68||Another textbook trade|
|2/9/2011||Put Calendar Spread (SPY)||$72||$102||A nice little trade that came with a number of lessons on trade management.|
|2/24/2011||Put Vertical Spread (DIA)||$70||$14||This trade offered a perfect opportunity to demonstrate the value of the new trading plan.|
|3/14/2011||Iron Condor (SPY)||$196||$81||I closed the puts for the target exit price but had to settle for a little less profit from the call side since the trade was running out of time. In a case like that, any profit is better than no profit.|
|3/25/2011||Put Vertical Spread (IWM)||$64||$64||Textbook trade. I was on the edge of selling May contracts vs April contracts. May contracts would have been slightly more profitable.|
|3/28/2011||Call Diagonal Spread (GLD)||$176||$15||I almost let this one turn into a losing trade. In fact the initial trade was a winner but I rolled it into a new trade that went bad.|
|4/27/2011||Put Calendar Spread (SPY)||$39||$135||This trade worked out nearly perfectly and the resulting return was even better than expected. I employed a strategy of closing part of the position on the first hint of profit.|
|4/28/2011||Put Vertical Spread (IWM)||$89||-$296||This is the first trade I've done using the new exit strategy rule that has resulted in a loser. This won't cause me to abandon my rule just yet.|
|5/31/2011||Put Vertical Spread (SPY)||$78||$78||This trade might not have worked out so well had I followed my early exit rule.|
|7/7/2011||Iron Condor (DIA)||$198||-$240||While the call side of this trade worked out fine, the puts got overrun with the heaving selling that took place over the last month.|
|8/22/2011||Put Credit Spread (SPY)||$100||$80||Almost as good as I'd expected.|
|9/14/2011||Diagonal Spread (SPY)||$328||-$337||This one faced a loss due to the heavy losses that occurred in Sept/Oct. One could have argued (in retrospect) that staying in would have paid off.|
|10/10/2011||Iron Condor (SPY)||$300||$36||This one was slightly profitable through a combination of a trade adjustment and tweaking one of my exit rules.|
|11/29/2011||Put Credit Spread (DIA)||$74||$74||The trade worked out pretty much as expected. I regret now a little but not going for the full amount but check out my closing comments as to why this was a good trade.|
|12/29/2011||Put Credit Spread (SPY)||$76||$80||I accidentally let this trade go a little longer and was fortunate that it turned out for the better.|
For trades entered and closed in 2010, check here.
While the point of these trade tutorials isn't necessarily to have each one turn into a winner, it's still nice to be able to track the result over time. While I've summarized the trades above, I want to provide a portfolio summary much like we would if we had a trade log. After all, it isn't really about how many winners or losers there are but what the equity curve looks like. The table below will show the cumulative result of closed trades. Note: This includes open debit orders so the balance may seem off sometimes.
|Starting Date||Starting Balance||Current Balance||Cumulative Gain/Loss||% Portfolio Gain||% Gain/Month|
|1/1/2011||$17,008||$17,009||$1||.01%||too small to mention|
As I continue to put on trades, how do I choose new strategies to trade? One way is through taking more of a portfolio management view. Check out this video to see an example of portfolio management in action.