MESSAGE FROM TRADERJANIE
This week I would like to spend some time comparing the different QiT strategies, look at them through a different lens to see if can all see how important it is to stick with the portfolio you’ve already chosen and that its not the portfolios you’ve picked but many times your timing.
I know a few QiT members are getting frustrated that the portfolios they are trading are not performing as well as some of the others. The tendency is to jump onto those that are generating superior returns. May I suggest that this may not be the best blueprint to follow?
As Eric Wolf so eloquently stated in his last article, “As we have all learned, long-term trading success comes from identifying a trading edge and then applying that edge to the market in a systematic and consistent manner.No matter how great the strategy, there will be times when market conditions are not favorable for that strategy. Nothing hurts a trader’s psyche more than to abandon a strategy only to see that strategy ‘catch fire’ while the new strategy goes into a period of under-performance.”
Let’s take a Look at Monthly Profits
I have created a table from each of the portfolios’ monthly profit going back to January 2014. But before we start, I would like to make a caveat here; the line charts are displaying separate monthly performances and not accumulated monthly profit. Thus you’d expect to see lines move from left to right vacillating around a median point (in this case 0%) as opposed to an equity curve where the line starts at the bottom left and (should) end at the upper right corner. I want to show you how the strategies trade in relation to one another and taking each month separately is the only way I could do this.
Here is the table from which the charts were created.
What you have here is a visual representation of how well each portfolio has performed compared to one another. Since this chart is a tad cluttered, and we want to compare apples to apples, or like portfolios to like portfolios, I have generated charts for the Retirement portfolios, the Margin, Level I, Level II and Level II & Ultra.
If you had started QiT in November 2014 and chosen L2-RP you would be very happy with the service. However, if you had chosen Ultra, not so much.
In early 2014, L2-RP did very well but around September it started to falter and by October 20th it had fallen below its circuit breaker at which time I took it offline. Needless to say, QiT members were fretting and I certainly don’t blame those who quit. But for those who stuck it out, moved their cash to the sidelines, then started trading once it climbed back above the CR on November 12th, they have been nicely rewarded. If you’d jumped ship and started trading a different portfolio, or quit QiT altogether, you would have missed the very handsome profits made since November 2014.
Now let’s take a look at the margin portfolios, or the strategies that SHORT. The first thing that jumps out is how well L2-AM did in early 2014 but then suffered in September/October of that year as did L2-RP. As well, Ultra did well in that October/November 2014 timeframe but has now gotten back in line with the other portfolios. What I found noteworthy is that L1-AM is the most stable, not making huge bumps up nor down, something all members should take into consideration.
It’s also interesting to note that all the Margin portfolios are doing about the same now.
Now let’s change direction and compare both Level I portfolios, L1-AM and L1-RP. These two are mean reversion, use a similar rule set and both exit at the open. They do differ in some very important areas though. L1-AM signals shorts, has no n-bar and maxs out at 10 positions, whereas L1-RP only signals long, has an n-bar = 4 and maxs out at 7 positions.
You’d be hard pressed to say one does better than the other.
Level II portfolios use a momentum type strategy and, as in Level I, they have similar rule sets yet differ in some very significant ways. L2-AM signals shorts, has no n-bar and maxs out at 7 positions whereas L2-RP only signals long, has an n-bar = 8 and maxs out at 10 positions.
You can see how both these strategies went through a tough patch in 2014.
Level II and Ultra – Momentum
Now I will add the Ultra to the Level II since they are all momentum. Remember though Ultra uses a rule set different from Level II and the only similarity is the type.
As I stated before they are all doing about the same now.
The one portfolio I have not talked about yet is the ETF. It is in a category all by itself because it trades a different universe, ETFs as opposed to the entire US stock market yet it can be traded in a cash account because it does not go SHORT – technically. I say technically because it does SHORT when it buys SHORT ETFs.
In order, to compare it with something I pared it with the retirement strategies. As you would suspect the ETF portfolio has a more stable monthly profit stream.
It’s not the portfolio you picked, it’s WHEN you picked it.
What I’m hoping to do here is paint a picture of what the portfolios have done over the last year and half so you can put where you are today into perspective. Like I said in the beginning I know some of you are getting frustrated with the portfolios you have picked but I think I’ve just shown you, it’s not the portfolio you picked, many times its our timing.
Stick with it and the strategy you have chosen will have its day in the sun.
It is, of course, up to you as to which portfolio you trade but I strongly suggest once you pick one you don’t try timing the market and jump from one to another.
Your best plan is to stay the course.
Plan your Trade and Trade your Plan