A Return to Form For a Trader with a Long Track Record

We are now into the early stages of the US corporate earnings season and the big banks have delivered a bit of a mixed bag so far. JP Morgan, the biggest of the big US banks when judged by capitalisation, reported record earnings and revenue on Friday, but Goldman Sachs and Citigroup came in with slightly disappointing numbers. Though both beat the expectations of Wall Street analysts when it came to profit, they also both missed when it came to revenue.

Although the major US stock indices slid slightly on Monday, they remain very close to six month highs. The corporate reporting season continues at a brisk pace this week, with IBM and American Express among the household names that we will hear from in the days ahead.

The German DAX has continued its strong performance for the year so far, closing above 12,000 on Monday, a level that it has been repeatedly testing in April. The German stock market is the key area of focus for today’s top trader, a fact that isn’t hard to guess from the account name, which is Die DatabankDE.

We last caught up with this account back in October of last year, when they were just beginning to go through a rough stretch profit-wise. Things have improved in recent months, though, and this is how the account now looks at the overview level:

This looks like quite a strong picture, and compares favourably to how things were before. Overall profit has improved from 20.3% six months ago to in excess of 28%, over the course of more than 500 additional trades, though there has been a little jump in risk metrics.

The risk score has crept up from 1 to 2, the volatility rating has ticked up from 2.01% to 2.33%, while the maximum drawdown is now 13.76%, having previously stood at 10.71% back in October. So there is some evidence that they have been taking slightly more risk than before in order to gain those profits. Nevertheless, these remain attractively low measures of risk on the whole.

Let’s now cast an eye over the monthly breakdown of their performance:

As we have noted before, one of the strengths of this account is the substantial track record, which stretches all the way back to early 2016. You can see here how positive things have been for the majority of that time — they delivered double-digit profit in both 2016 and 2017 and are already on track for that in 2019.

You can also see that the second half of 2018 was a tough time for this account, a period during which they struggled through a cluster of months in the red.

Things are looking much more back on track in 2019 though and April is going particularly well, despite only being halfway through the month.

Let’s finish our review by looking at the assets they have been trading with.

As we commented the last time we caught up with this account, there isn’t much diversification on display.

The focus, as explicitly stated in the account’s strategy summary, is very much on the German stock market, with the pool of individual stocks they trade largely selected from the DAX, while the vast majority of trades directly use the index itself.

Despite this lack of diversification, the account boasts many strengths, notably the long track record, the low risk metrics and the overall size of the profits that they have achieved.

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