2/26 I Digress

I don't often discuss my trading philosophy.  Trading, for me, is performed with an irreplaceable resource, my capital, which was built by a lifetime in the proverbial mines. When I trade I protect my capital.  I enter into small positions, even when I believe larger trends exist, until my profit allows me to increase position size without increasing risk beyond my initial tolerance.  For instance, my initial maximum risk is less than 1% of capital.  If a loss on any position reaches .5% then I shift stop-loss to just beyond the nearest support/resistance moving average that limits the risk to no more than .2% additional loss.  Entering positions in ETFs is almost always 2% unless the trend is already in force and I've achieved and closed out profits in that direction already.  I tolerate initial entry once trend has been established to 6% on any ETF until profit builds and I can expand beyond that.  When I'm in multiple positions with strong correlations I limit overall size to 25%.  The stock market has not yet entered it's down phase so my position size is much smaller than it will be then.  Even though I1 is rising and I've made money on the long side I do not believe in the trend and will keep positions small until after March 25.  I1 stays at a high absolute level until May 13-16 so I will not really ramp up my short position until that time.  This is the first I1 formal sell signal of the year.  This view also allows for the effect of QE2. 

If you inspect the posted  Trade History you will find 2 spreadsheets, the second is entitled Trade History Profitability.   This provides profitability of every trade that I have undertaken since this blog was created.  Column J, Profit, is the net profit/loss of each trade from initial entry to ramp-up to close-out.  The next Column K, is a cumulative account balance, assuming $100,000 starting capital.  Looking at the Profit column any losses incurred are well under 1% of the running account balance and only 2 trades registered anywhere near .8%.  So, while I'm ahead 28% on capital since I started the blog this is remarkable in that I normally have 80% of my capital in money market instruments!  The interest on the money markets is not included and brokerage commissions are not included (at $5 a trade they balance out with the interest accrued).