Year End Wrap Up 2012

new-years-eve-new york

Wow!  Can you believe it, the year is over already?!  I definitely can’t.  Time flies when you’re trading markets, I guess.

And seeing as we have just dipped below the 50 day MA and I will be out of the market next week (the rest of the year), I thought I would put together my year end wrap up. And what a year it has been!

This year was all about experimenting.  It was the first time I had made my trades public.  The first year I had put out a weekly watchlist.  And the first time I had traded a plan that focused on 1 week holds.

And it turned out amazing!  While last week was a negative week to the tune of -3.05%, we finished off the year with a very respectable 58.73% gain!

While the market does have one more week of results to log, I doubt it’s going to catch us. So far it’s up 10.80% for the year, meaning we absolutely killed the averages!  Yes!  And all from trading low priced stocks.

Let’s take a look at the chart for the last year:

last year SPY

As you can see, as a whole the market moved up this year, which is always a GREAT thing for trading on the long side.

As individual stocks move in tandem with the market at the rate of 4 to 1, the general trend for the overall market is something you really want to pay attention to.

For myself, I use the 50 day moving average as a general indicator.  In the chart below you can see how this kept me in the major trends this year and kept me out when the market was crashing.

last year SPY 2

Awesome!

Does that mean that every trade was a winning trade?  Heck no!  I had just about 50% winners and 50% losers.  But my winners were 1.81 times greater than my losers.

Here are my final stats for the year.

5 Position Watchlist total stats

At 5 trades per week, I ended up with 170 trades total.  I sat out a total of 19 weeks, which is not easy!  The cumulative P/L was 402.95%!  With an average gain of 2.33% per trade.  A win rate of 49.71%.  And a win/loss ratio of 1.81, meaning my wins were 1.81 times bigger than my losers.  I accomplished that by having max stops at -10% and targets at 30%.

You could argue that I might benefit from making my stops tighter at -5% instead of -10%, but you have to understand the average daily range for low priced stocks is much larger than higher priced stocks, and they can easily swing 5% in a day and take you out of a trade before rocketing up.

Here’s how everything played out by month:

5 Position Watchlist by month

Amazing!  Only 1 losing month!  When you come from a place of losing consistently like I did, to see stats like this is absolutely amazing.  This is what happens when you follow your plan and you do your homework!

The only really negative month was April.  I’m interested to see what the market looked like then:

april 2012

As you can see, nothing too dramatic happened.  There was a lot of chop, but it DID precede a really big drop in the market.  And it has been my experience, that smaller, low priced stocks do move first before the rest of the market.

That means that when you are trading them, your trend is always going to end a few weeks before the market makes a move.

Finally, the last thing I tracked was how my trades fared when th market was trading below the 50 day MA.  I did this just to be sure that I wasn’t missing out on something good! Here are the results for all th weeks when I was out of the market and I posted trades anyway:

below 50 ma

As you can see, I was out of the market 18 weeks (19 if you include next week).  During that time my trades actually had a positive gain of 5.54%.  On the surface, that might look okay, but you have to understand, that 5% took a lot of work, and in the end, 1 big week (5/20/12) saved the stats.

Also, it is very important to note that when the market is above the 50 day MA I have 2-3 times as many winning weeks as I do losing weeks, when the market is below the 50 day MA that ratio becomes 1:1.

Another important point to factor in her is burnout!  Like any other job, it is very important to take time away from the market. This allows you to clear your mind, regroup and come back refreshed.  So if the market is trading how you like it to, take some time off and blow off some steam!

In conclusion…

In conclusion, I have to say that I had an amazing year.  The trades worked well, it felt great to post them, and I learned a ton!

For the upcoming year, I am not going to be focusing on posting my trades.  They will be for me.  I am going to be focusing more on highlighting some awesome free trading resources for traders, and how you can use them to rock your own trading results.

Hope you have an amazing New Years Eve, and I’ll be seeing you on the other side!  For a list of every trade I made this year, check out my complete stats.  To me, they are amazing!

As always, good luck out there…and do your own homework!