I’m a teacher of swing trading and I put real money on my real-time buy and sell alerts. The bull market we saw at the end of 2012 carried right over into 2013. As a result I’m trading a little more aggressively than I normally do, taking advantage of this run, averaging about 3-5 swing trades each week. At the start of every year my clients and I make a goal, in 2013 mine is to make $10,000 a month while teaching trading full-time. I have 26 wins and 10 losses so far this year for a realized profit of $43,364 winning 72% of the time. Yup, less than 2-months into 2013 and I’ve realized a 14% return on the portfolio.
Of my 10 losses so far in 2013, the 2 biggest were on NUGT which isn’t actually a stock but a leveraged exchange traded fund, 3x GDX. It’s very rare that I swing trade anything other than stocks but I thought had the bottom on gold and gold miners pegged twice and failed both times. The first loss was for -$11,400 (-11.45%) and the second loss was for -$7,900 or (-9.52%). Add those together and there’s -$19,300 in losses on NUGT in 2013. If you add up 10 other losses all on stocks it’s -$10,000, almost half the 2 NUGT losses.
Unlike a lot of newsletters out there, I keep a history of my trade alerts so clients can learn from them. That’s why I say Jason Bond Picks is a diary of a real trader. So as I reflect on my performance so far this year, it’s obvious I have a better handle on small cap stocks than I do on leveraged exchange traded funds. Additionally, my average loss on the 2 NUGT trades was -10.49%, the other 10 losses on small cap stocks was -1.86%. Clearly my stops on the 2 big NUGT losses were horrible and to be honest, embarrassing.
So here’s what I’ve learned. Clearly my handle on the gold and gold miners reversal isn’t as good as I thought it was and my stubborn attitude not stopping out sooner and taking my loss like my other trades -1.86% cost me an average of -8.63% more. The big percent losses were also on positions sizes much larger than I normally trade which as I write this makes me even more frustrated with myself. Had I cut both of those trades around -2% instead of around -10% I’d have roughly $16,000 more profit in my pocket adding to the $43,364 realized profit I’m up in 2013.
In summary, my handle on the gold and gold miner reversal through leveraged exchange traded funds like NUGT isn’t nearly as good as my handle on the direction of small cap stocks. In addition, going big on those trades without a tight stops like my other trades cost me -$19,300, roughly -$16,000 more than it should have. Moving forward I’ll probably stay away from leveraged exchange traded funds and I’ll definitely stop out with a more disciplined approach if I do take one.
I’m happy with my performance so far in 2013 with realized profit of $43,364, but there’s always room for improvement… clearly I’d rather be up $62,664 had I just steered clear of NUGT or about $60,000 if I’d just stopped out around -2%. I evaluate my performance at the end of each week, month and year followed by making necessary changes to my trading to maximize my return. Make sure you keep a trade log too, looking it over at least every month trying to find patterns of strength and weakness. Trust me, to win on Wall Street, it’s the little things that add up.