Taking Stock of 2006!

Greetings, I have finally found the time to post my trading results for 2006. Here are the Stats!

Total Trades: 12

Total Winning trades: 3
Biggest Winner: $554.06
Average Winner: $412.08
Total Loosing Trades: 9
Biggest Looser: $777.91
Average looser: $243 or (2.43% of base account value)
Winning Trade %: 24%
Average Win/Loss per trade for year: -$47

My net loss/gain for calendar year was -9.13%.
This does not take into consideration the gain for my JEC trade which I closed in the New Year. When this trade is taken into consideration, my net loss/gain was -5.64% (as of 1/8/06). My max account drawdown at any one time was 56%, and this was during the month of August.

From looking at the statistics above, 2006 was less than a stellar year for my trading account. On a more positive note, my average winning trade was greater than my average loosing trade. Besides not having enough of them, I am happy with my winning trades. 2 went as good as they could, one I exited too early on a day my account was suffering max pain and I feared loosing my gain…

Of all the loosing trades, 2 accounted for almost half the total value of losses to impact my account value. The two biggest loosing trades happened early in the year and provided me with a very valuable educational experience (which I paid for with cash from my account!). The primary reason for the significant loss on these trades included late entry and incorrect position sizing.

Even though I believed that my stop was in the right place, the combination of the late entry and incorrect position sizing amplified the effect of the loss. Regardless of what I thought (hoped and wished) would happen I should have exited these trades at my max loss threshold for any individual trade (+/- 2% of my total trading account). 3 other less significant loosing trades were due to trading mistakes on exit, and the remainder from being stopped out for a small loss when the trade moved against me.

My paper trading account was a different storey. I increased its account value by approx 60%. I think that the primary reason for this was that I acted without fear or inhibition, placing trades as I saw fit. I also made about 2x as many trades on the paper account. Where I would make 2, 3, or 4 trades from my watch list on the paper account, I might only make one of these trades on cash account. The significant gain on the winners always made up for (and then some!) the loosing trades. What this has taught me is that I was able to make more winning trades than loosing trades. I just need to get over my fear and act with the same confidence in the real market place.

2006 was an intense learning experience for me. A lot of gratitude and thanks has to go out to my wife for all her support. I am a very lucky man. The money I lost to the market has paid me back many times over with experience. Through learning from my mistakes, refining my trading system, overcoming my fears, and acting without hesitation, I will become successful. I look forward to 2007 and what she will bring.

Cheers - David