Back on Track After a Rocky Run

Unease regarding the health of the world’s economy weighed on stock prices last week, a situation that was not aided by Friday’s surprisingly soft US employment data — US nonfarm payrolls growth slowed to just 20,000 in February, undershooting even the low end of Wall Street expectations by more than 100,000 jobs.

This week has begun with evidence of resilience in investor sentiment though, as the stock market bounced back in a big way on Monday, the S&P 500 Index closing almost 1.5% higher.

The overall buoyancy of global stock markets since Christmas has meant a fairly benign environment for investors and we have seen strong performances from many top traders so far in 2019, including Barfein, the top trader we are looking at today.

Here’s how their account looks at the headline level:

There are a few things worth noting here. Most are positive, though let’s start with the obvious negative on display, which is the size of the maximum drawdown. At 24%, that is on the high side. Furthermore, it doesn’t compare favourably to the size of the overall profit on the account, which stands at 13.8%. Before we dig further into the data, just bear this figure in mind.

That said, the account does hold a lifetime double-digit percentage profit performance and they have been trading with real money for close to two years. That’s quite a substantial track record for us to look at. We can also see that the overall risk metric for the account is fairly low at just 2, with a volatility rating below 5%.

Let’s look back over that substantial track record then and see how the profit and losses have been from month to month:

After delivering a very solid profit in 2017, with returns close to 8.5%, 2018 was a year to forget, giving back more than 4.5% over that period, with back-to back chunky drawdowns in October and November.

Since then, they have been firing on all cylinders though, posting a massive gain in December, and all the subsequent months are showing green, which is what we like to see. With less than a quarter of the year gone, they are already up just under 10% for 2019.

Before we sum things up, let’s take a peek at the instruments they have been trading with.

There isn’t much going on here in terms of diversification. As you can see, a tiny slice of trades use the German DAX, but otherwise the account is entirely focussed on silver. There is something to be said about trading what you know, of course.

While this account is clearly heavily exposed to the vagaries of the silver market, we can also see from the evidence available to us that they have been successfully trading this market for a number of years.

Overall, this is an interesting account. On the whole they have demonstrated an ability to turn a nice profit, though as that large maximum drawdown suggests, there have been some fairly big swings in the fortunes of the account. They are currently in the middle of a nice run, though, and this might be one of those accounts worth considering while things are going smoothly and ditching when the going next gets choppy.

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