2020 YTD: 7.6% (What a good start to the year!)
Total from Jan 2 2019 to Jan 15 2020 : 37.43% on total balance.
During the last 6 months, I’ve spent probably 6 hours a day (when I am not traveling :P) trying to design the most diligent portfolio of trades that I can. I am basing it on the tenant that a series of well diversified trades or portfolio compositions will provide a better risk adjusted return that in turns lowers my variance and stress and keeps my humanity out of it. Not only does it reduce variance and risk but it has a positive affect on human factors (the humanity part). If you have 10% of your account in a single strategy, you’ll be less apt to get cognitive bias and other negative human attributes involved. I am sure everyone has experienced that before, when you’re in an ATM options trade and you’re at an adjustment point but the technicals all point to oversold and you want to wait for a bounce to adjust, yet it doesn’t bounce? Yeah, that’s human factors. You realize you fucked up so now you’re looking for an opportunity to adjust and emotions get involved. I’ve been there. The V of 2014 was that time. Things that are extremely overbought get even more extremely over bought..It is momentum. If any given trade strategy is a smaller part of the portfolio you’re less apt to do that. I haven’t really done that in the last few years but it’s something that many newer traders struggle with. When you search for reasons or search for confirming evidence to avoid adjusting in a rules based trade then you’re introducing new variables into what was a thoroughly backtested trade. It’s not the same trade now. Follow your rules. All of my trades are now non-discretionary rules based trades.
Having been through 5 years trading complex options positions through what feels like everything (short of the flash crash of 2010). I consider myself now fortunate to have suffered immensely through the following environments because it set the stage for a very strong development of resilient well diversified and non correlated trading portfolios that gives me excellent risk adjusted returns. At the time of each of these, I am sure I was in some pain but they all taught me how to risk manage and to be a resilient and careful trader:
- The V bottom of 2014
- The crash of Aug 2015
- The prolonged bear move of Jan 2016
- The extreme low vix environment of 2017 AND the subsequent highest transition VVIX move to Volmageddon
- Volmageddon – Feb 2018
- The no activation of hedges environment of Oct/Dec 2018
- The tweet environment of Aug 2019
I am hoping this year beats the last, it actually was a very slow year in terms of trading, I had almost no structures on from September on. I had to rely on my LTI portfolio until December when I was able to get a few structures on.
I am traveling a bit this year, going to Miami today to play a poker tournament, LA in Feb, a transatlantic cruise end of April with a brief two week tour of EU again. I return for the WSOP in Jun and July and PSPC in Barcelona in August. After that I have no idea..#travelsandtrades 🙂
More to come..