If you’re not a member and don’t trade these equity curves, don’t bail just yet. Obviously, you’re a trader or interested in trading. Otherwise, you wouldn’t be here, right now, sitting in that comfy chair, waiting with bated breath to see what I’m going to blather on about today.

What I am going to talk about pertains to every trader.

90% of the time equity curves are in a drawdown

90% of the time, equity curves – the accumulation of your profits and losses – are in a drawdown. A definition of a drawdown is, “the peak-to-trough decline during a specific period of an investment, fund or commodity.”

The Ultra equity curve below is from January 2017.  This portfolio was making new equity highs where you see the little red circles. Little Red Circles means you are doing your happy dance. You are making plans to buy an island off of Tahiti, heck maybe even buy Tahiti.

Quantifying my claim

I could take the time to quantify my 90% claim – or pay Bruce to do it – but that is not going to add anything to this discussion. Who needs more numbers to numb the brain?

I’m sure its as clear ink stain on your shirt when you forget your pocket protector that we don’t spend a lot of time in the little red circles. Maybe I should have drawn little hearts instead.

The only thing I’m going to do today, so you can get on with your day, is show you a chart of each of QiT’s portfolios.

On each chart, I have drawn a red line showing you where I eyeballed a protracted drawdown (once again this is eyeballed). Each line is drawn from where the drawdown started to where it ended. I then logged each of those eyeballed drawdowns on a spreadsheet

 

If the portfolio is currently in a drawdown, I’ve used today’s date, December 31^st, 2017 as the end date.

We don’t see new Equity Highs very often

What I would like to illustrate to you is how often these portfolios are not making new equity highs.

Let’s demonstrate how these trying times can last for weeks. How they can drag you around like a banana peel caught in a street cleaner for months.

After you take a look at each of these, you will never look at an equity curve the same.[/ezcol_1half_end]

It can look as good as any of the charts I’ve posted below. However, trading these strategies day after day after day … can be challenging.

So go ahead and write love letters in the sand to the new love of your life. But understand what it would be like to live day to day, with this newly found apple of your eye. Look at each Red Line as sort of like the times you have an argument with your significant other. Like when you just pass each other in the hall with a head nod.

 

SP500 Margin

 

	Start Date	End date	# of Days in Drawdown
	4/28/2010	9/30/2010	155
	6/8/2011	1/12/2012	218
	4/4/2012	8/8/2012	126
	2/22/2013	5/29/2013	96
	3/19/2014	7/11/2014	114
	7/25/2014	12/15/2014	143
	7/12/2016	1/26/2017	198
	6/13/2017	12/31/2017	201
Average Days in Drawdown			156

 

SP500 Retirement

 

	Start Date	End date	# of Days in Drawdown
	6/6/2011	2/16/2012	255
	4/11/2012	9/14/2012	156
	10/4/2012	1/1/2013	89
	2/21/2013	7/25/2013	154
	8/16/2013	10/8/2013	53
	4/7/2014	6/12/2014	66
	7/29/2014	12/3/2014	127
	3/30/2015	5/19/2015	50
	8/25/2015	10/29/2015	65
	1/11/2016	3/11/2016	60
	5/3/2016	6/17/2016	45
	10/10/2016	11/11/2016	32
	4/12/2017	6/5/2017	54
	7/25/2017	11/8/2017	106
	12/5/2017	12/31/2017	26
Average Days in Drawdown			89

 

Ultra

 

	Start Date	End date	# of Days in Drawdown
	9/7/2010	2/3/2011	149
	6/8/2011	9/22/2011	106
	2/16/2012	4/10/2012	54
	7/17/2012	9/5/2012	50
	3/24/2014	5/12/2014	49
	4/2/2015	5/8/2015	36
	7/3/2015	11/16/2015	136
	2/18/2016	5/26/2016	98
	6/12/2016	7/6/2016	24
	10/10/2016	12/12/2016	63
	3/28/2017	10/31/2017	217
Average Days in Drawdown			89

 

Momentum Margin