Trade Analysis

So, for any of this to matter or teach me anything I need to figure out my statistics and how I am doing and what I can learn so I can improve or continue doing what is working.

These are the statistics YTD:

Wins:11
Losses:13

Average Profit: 1,606
Average Loss:525

Win Ratio: 45.8%
Loss Ratio: 54.2%

Expectancy: .458(1606)+.542(-525)=451.5

So we can see so far this year I have been pretty good about keeping a risk to reward of 1:3. I learned something interesting that could be very telling and will likely need to be adjusted. Of my wins, 9 of them have been long positions, either stock or long calls, or short puts. Only 2 were short positions(long puts). My losses are also mainly long positions with 10 being long and 3 being short.

This is obviously fine during an uptrend and bull market which is likely the reason for the recent success of March since it has essentially been all upward. This also generally works with the general bias of the market since there is a general upward drift when we aren't in such an extreme environment. I obviously like to be long rather than short, and take my losses when they don't work but I may get better and more consistent results if I am more flexible. This is likely the main reason for severe losses last year, I was trading counter trend. This seems stupid but you'd be surprised how you sometimes forget the simple rule of trading with the trend.

I have a positive expectancy which is what you ultimately need to have to be a successful trader(investor) and have positive returns in the long run. Theoretically if I keep a 1:3 risk reward ratio I need to be correct only 30% of the time to have a positive expectancy. Obviously the higher the win ratio the better the returns so I'd like to at least hold it at 45% or improve if possible as an average over the long run but even if I have a bad month of taking positions I know I can be wrong 70% of the time and still be profitable. It seems counter intuitive and is but the statistics and probabilities must be embraced to have any chance of succeeding otherwise you will always second guess yourself.

This analysis has exposed the fact that in bearish markets I need to embrace the trend to keep up performance or have less volatility in my returns. I clearly prefer a long bias and so far patience and scaling out of positions has served well to lock in gains and reduce volatility but I need to be able to do it the opposite direction when necessary.

The only thing that I can't do much about now is the fact that my trade commissions have eaten up 6% of my profits, however I can say that patience has helped that greatly. I will look to summarize results again at the end of April.