We saw further evidence at the end of last week that investor sentiment remains extremely sensitive to any signs of economic slowdown, when indications of weak eurozone manufacturing led to a sharp fall in global stock prices.
The February flash PMI from IHS Markit showed manufacturing output in the euro area plunging to a 71-month low of 47.6 and moving even further into the sub-50 level that indicates contraction. Worryingly, the new orders component of the report slumped to its lowest level since since December 2012. With new orders on a stretch of six successive declines, further weakness could lie ahead.
That saw major indices tumble. The Dow Jones slid 1.8%, for its worst one-day decline since early January, while the German DAX performed even worse, dropping more than 2%. Perhaps ominously, there was no real bounce back on Monday. The DJIA edged up less than a tenth of a percent, while the S&P 500 declined by a similar percentage.
Such a big slide in the DAX will have had a sizeable impact on the top trader we are looking at today, who has a large exposure to the German index. This trader operates under the name OnwardsAndUpwards. Though relatively new, their account has some strong performance metrics on display as you can see below:
A few things stand out here. First, there is the favourable comparison between maximum drawdown and overall profit, with profit more than twice as large as the max drawdown. Second, there are the measures of risk and volatility, both showing quite low levels, which is what we like to see. Thirdly, and less favourably, there is how recently they started trading with real money.
This final point is a bit of a caveat that needs to be kept in mind when looking at how positive the performance has been — it’s still very much early days for this account, so we shouldn’t get carried away.
Having said that, let’s now move on to break down the profit performance into monthly chunks:
As we already knew from the 100% winning months shown in the headline metrics, everything on display is green here. January’s outsize gain in excess of 10% looks to be an outlier, at least judging by the limited data available, though there is a reassuring consistency to the size of the profits in all the other months. If they can keep this going, they will have a wonderful year; that, of course, is a big if though.
To round things off, let’s cast our eyes over a graphical representation of the make-up of the markets they have traded:
They haven’t been using a wide variety of instruments so far, though the two indices do provide some limited measure of diversification, both geographically and in terms of the breadth of composition inherently offered by an index.
Overall, this is an account that doesn’t appear to have put a foot wrong so far, though we only have a handful of months from which to judge. To make a more complete assessment of this trader, it would be prudent to wait for them to build up a more lengthy, and therefore convincing, track record. But the evidence on display up to this point has certainly been positive.