Posted by: Bevan | April 5, 2012

March 2012 Trading Commentary

March was a quiet month in the markets.  The inexorable upward climb of the US stock market continued, buoyed by Fed money flushing through the economy and a few positive economic reports.  The Yen weakened further, consolidating towards the end of the month.  Corn finally broke out of consolidation to the downside, however this turned out to be a bear trap as it quickly returned to its range.  Lean Hogs also headed south later in the month.

The Yen move produced a trend allowing a 0.6 R profit for my system.  The sideways consolidation carried on a bit too long after a strong upmove, however we will rejoin the trade should the move show continuation.  After a 1 R loss at the beginning of the month Lean Hogs produced a solid move at the end of the month.  Although this trade hasn’t closed yet it should produce a solid profit.  A brief  ‘fake-out’ down-move in the Euro led to a 1 R loss, while unfortunately a 1.14 R loss resulted from bad slippage on a T Notes up move which didn’t continue, and which saw an exit in a very fast market after economic news.

My long trade in early March was followed within a couple of days by a strong reversal. Although I suffered bad slippage in my exit on the 9th 'cutting my losses short' proved to be the right thing to do once again - look at the ensuing price action!

Overall the month saw a 7% loss.  This is the longest losing streak and biggest drawdown since I began trading systematically in late 2009.  It certainly is frustrating although still within historic norms.  We just simply haven’t had the number of bigger trends that are necessary to produce profits.  All that can be done is to stick at it through the months until they arrive.  Arrive they will though – history shows us that fundamental factors eventually prevail and often very strongly after being suppressed by lack of market participation or intervention.  The past decade has seen a few bad years for trend following methods generally.  2005 to 2007 were tough for many, and although I wasn’t trading it then this system performed pretty poorly in 2009.  It exploits trends nicely, has a good profit to drawdown ratio and will latch on when the moves are there to take advantage of.

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