Friday, January 07, 2011

A Review of Last Year's Trading

Now that we have begun the new year it is time for me to look back and see how I did in my various subscription service trades over the last year. Overall I consider it to have been a very good year. In the discussion that follows, please be aware that the results do not include commissions that are always a part of any trade. In my own case I generally pay $9.95 each way for stock trades of up to 1000 shares and $12.50 for each leg of an option trade up to 10 contracts. I am sure that lesser commissions as well as higher commissions are available but I am quite satisfied with the brokerages I use and I mention those amounts only to give you a better idea as I discuss overall results for 2010.

Looking at the trades closed in 2010 in the $10 Trader 97% were winners. In fact, I had only a single loser in $10 Trader for the whole year. The average return on those winning trades was 8.6% per trade and the average trade length was 31 days. Only two of those winning positions were held longer than 100 days and if they are excluded from the average, the average trade lasted 19 days. Of those closed trades, I was in the shortest for only 2 days and the longest for 285 days. The average entry price for stocks purchased in the $10 Trader subscription service was $6.20 and the average gain per share was 53 cents. The only loser was down 51 cents a share. I began $10 Trader back in 2006 and since its' inception have had over 80% winners.

The same is true for Trend Trader that I also began in 2006. It, too, has produced more than 80% winners since it was started. In 2010 I had 88.5% winners in trades closed in Trend Trader. The average share price of positions closed in 2010 was $18.98 and the average gain of the winners was $1.32 a share or 7% a trade that lasted an average of just 44 days. That average appears to be somewhat high since I held one position for 300 days and another for 221. If those two longer duration trades are subtracted, the average trade lasted less than a month from entry to exit (27 days). There were only 3 losing trades that I closed in Trend Trader in 2010 and those resulted in an average loss of just 57 cents a share.

There are a number of reasons I trade options and among them are the leverage they can afford and the ability some strategies provide to reduce or limit risk. Over the years I have found that a trade off for these benefits is that I usually have a lower percentage of winners in Option Trader than in the other services, but that does not necessarily translate into making less money with my option trades. This year I also had what I consider to be another good year in Option Trader which resulted in 75% winners in trades closed. A review of the Option Trade Table shows gains of 67.6% in 18 days, 29% in two weeks, 67% in 6 days, 16.7% in 9 days, 16.5% in 8 days, 37% in two weeks, 25% in a month and a half, 22.6% from a Friday to the following Monday, and 3.9% in two weeks. Of the four losses taken during the year, the largest, by far, was $3.09 a share. I certainly do not mean to suggest that every option trade will have a great result. For example, I currently hold a position that expires this month where I expect to take a hit in spite of efforts over time to make adjustments and reduce risks. On the other hand, on this past Tuesday, I closed a position I had been in since last March with a 142% gain after several adjustments during the course of the trade.

One last thing I want to mention. After closing the 142% gainer this week I received an email from a subscriber who was disappointed that I had not taken the gain in 2010 for tax purposes. It is important to note that I am not permitted to give and do not give individual financial advice. Similarly, I do not and am not permitted to give tax advice. Please understand that whether you subscribe to the paid services or not your financial decisions must be your own. I cannot, do not, and will not make financial decisions for you. The risk is yours in any trade you choose to make. In these paid services I show what I am doing and almost always make the trades myself. Subscribers can see what I am doing and how I am doing it but any trade they make must be made based upon their own decision or their decision in concert with their financial advisor. I am not a financial advisor so please consult with a licensed professional on financial, legal, or tax matters when making trading, legal, or tax decisions regarding matters of importance to you.

Here's to a great 2011!

by Bill Kraft, Editor
Copyright 2011, Makin' Hay, Inc.
All Rights Reserved

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To comment on Bill's article click on the "comments" link below.


Anonymous said...

Congrats on a great year!
Could you please tell me how trades ou did in each one the subscriptions?


Anonymous said...

What is the total gain/loss of each of your subscription services?
I have noticed some publishers claiming over 80% winners but the loss from the less than 20% losers
were greater than all the gainers.
The total portfolio ended with a gain of less than the S&P 500 index. You need to disclose your results compared to the S&P500.

Anonymous said...

Sorry my message got distorted, it should have read:

Congrats on a great year!

Could you please tell me how many trades you did in each one the subscriptions?

Bill Kraft, said...

Sure, Bryon. There were 31 trades closed in the $10 Trader, 26 in Trend Trader, and 27 in Option Trader. Incidentally, all trades appear in the Trade Tables for the various services. Thanks for writing.
Bill Kraft

Bill Kraft, said...

Anonymous, all the trades are listed in the Trade Table for each service. They were overall winners. I'm wondering how you might think that the closed trades on the $10 Trader could possibly be a loser when there was only a single loss of 51 cents a share and 31 winning trades that returned an average of 8.6% gain on an average entry of $6.20. If you have read my articles and/or books over time you may recall that I personally advocate traders use a money management system for position sizing and using such a methodology (there are several possibilities)definitely can help in creating overall profits even with much lesser winning percentages. Thanks for writing.
Bill Kraft

Robert M said...

Excellent trading results! Makes me
ask my self why I'm not a subscriber? I assume you will cover the other 3 services in your
next newsletter. Thanks for all the
wisdom and experience you have shared this last year. If I may ask about your services, do you just do entries and exits or do you provide insight into your reasons for them. Thanks

Bill Kraft, said...

Thank you, Robert M, Option Trader, Trend Trader and $10 Trader are the only services that I edit. I have nothing to do with the other three.
Bill Kraft

Anonymous said...

Great results and Best wishes for continued success in 2011. However, I would like the results to be NET, after any and all fee, charges, and commission. That is the only true measure of success.
I think your results would not be too unfavorable impacted but net is a better measure.

The Old Trader

Bill Kraft, said...

Thanks for writing, Old Trader. Since subscribers use various brokerages and pay various commissions and since I only discuss my own entry and exits without talking about my position sizing I only set out the information I already have. Once we begin to talk about net, the issue of taxes also comes into play and that makes the issue even more complex. You are absolutely correct that in my own case the results are not impacted too greatly by commissions. I use an internet brokerage for most of my own trading and the commissions are relatively low although I know that some brokerages charge slightly lower commissions than the one I use but I like their service when I need it and like their fills.
Bill Kraft