The US stock market broke new record highs in early October, yet prices came back down to earth last week, as growing fears over rising interest rates sparked a sharp correction in the value of the major US stock index benchmarks.
European stock indices have been no less bearish in recent trading sessions, with the DAX setting new lows for the year and the FTSE100 tumbling to is lowest since March.
Naturally, these are challenging conditions for many traders, and that’s the way it’s been proving for DieDatenbankDE, the top trader account that we are going to look at today. They have struggled over the past few months, though they have performed strongly in the long run, as you can see below:
Things still look rosy at this headline level — they have a healthy overall profit in excess of 20%, with a risk score of 1 and a comfortably-low maximum drawdown of 10.71%. Even better, they have managed to build this profit over the course of more than two-and-a-half years.
When we drill down to look at the monthly performance though, we can see how the performance has dropped in recent months:
As we can see, things went very well for both 2016 and 2017, achieving double-digit percentage returns in both years. The second half of 2018 has been dominated by red figures though, pushing the year as a whole into negative territory.
So what’s gone wrong?
Let’s see what instruments that have been trading with, to see if that helps shed any light on the issue:
There isn’t much diversification on display here — the DAX itself comprises more than 90% of all trades. When not trading the DAX, the account uses German individual stocks, so the account is very exposed to the German market.
The stated précis of the strategy is to generally be long the market, so that we can see why recent declines in the DAX have been reflected in a decline in fortunes for this account.
I think it’s still a promising one to keep an eye on, though, for signs of a return to previous form, based on the length of the profitable-span of their track record, which was achieved while maintaining a very low risk score and keeping the maximum drawdown in check.