"Don't love open equity. It won't love you back"
The above quote is what a great trader once said to me. Watching open equity get whittled away is something that nobody tells you about when you design long term trend following systems. All you tend to focus on is the bottom lines of profit and maximum drawdown. But the journey to get to that destination is what we all must go through. And that journey can be much harder than you expect.
I was looking at where the system was at the end of FY2008 and PRC I saw was up 82% and the pyramid up about 37%. When they were closed, profit was just 38% and 10% respectively.
You will notice all of a sudden I'm only down just 10% for the year - how come? It's because I've decided to try and focus less on open equity and more on closed equity. Sure I won't have those weeks when i "make" $2,000+ but I won't be "losing" that amount either. For interest's sake, the system was down 21.00% for the year on an open equity basis.
You will notice all of a sudden I'm only down just 10% for the year - how come? It's because I've decided to try and focus less on open equity and more on closed equity. Sure I won't have those weeks when i "make" $2,000+ but I won't be "losing" that amount either. For interest's sake, the system was down 21.00% for the year on an open equity basis.
So from now on, no more reports on open equity, and I will only be reporting closed equity on this blog. And since I only close trades every few months, even monthly blogging will not be needed. Perhaps quarterly.
My other system (short-term mean reversion) will be started up on a small scale sometime in the next few weeks/months and its progress will be monitored here.
Thanks to those who have followed and commented on this blog for the past 12 months. Good luck for FY2010.
