Tuesday, January 8, 2013

2012 - Year In Review

It's been a long time since I updated the blog so I thought I would post a 'year in review' write up.  I'm not sure how many people read the blog nowadays, but I'm really posting for myself as I find it therapeutic. 

In general 2012 was an "OK" year.  I started the 1st half on very good footing.  I experienced a lot of success both professionally and personally, got into the best physical shape of my life, took my marriage to the next level, and created new and exciting relationships.  Everything was going extremely well.

On the other hand, July through December were very tough months - especially personally.  Certain "life issues" came up and when you trade with those issues it clearly impedes your ability to focus on the things you need to be focused on, so needless to say it was challenging.  But, this post is not about whining about how things went wrong - it's aimed more at setting an intention to learn from those tough situations and subsequently applying those lessons learned going forward.


One of the biggest lessons I learned last year was with respect to clients' expectations.

It seems like an 'obvious' statement when you hear that "At some point every strategy will have its losing period."  But, it's one thing to conceptually say that, and quite another to actually live through the losses and continue trading the strategy.  That's where the rubber meets the road.  It's not an easy thing to do, but absolutely nothing in the trading world is 'easy'.  It is a constant challenge that makes you grow each day, month and year.  

I have always been very straight forward with existing and potential clients that the Freedom system is:

  • A long term system (i.e. one must look to compound their capital over years);   
  • That you must accept/understand the risk(s) involved;
  • Do not micromanage the monthly profits/losses; and
  • Allocate the proper amount of capital to the strategy that you feel comfortable with.

All this - in principle - is much easier said then done.


The cold hard truth is that the Freedom system had its first losing year in 8 years in 2012.  Below are the annual returns:

Some may not find it surprising to hear that 2012 was also the first year I lost clients, and I have to admit that I was honestly taken back by how 'quickly' - in the context of a long term system - some clients decided the system was not for them.  In short, the experience taught me a lot.

It re-emphasized the importance of trading a strategy (with the proper amount of capital) that you are comfortable with, and having the discipline to stick with the strategy - even through losing periods.


Now, I am by no means upset at those clients, nor do I hold a grudge of any sort.  In fact, quite the opposite.  I am very grateful for having gone through that experience.  It gives my clients - both future and present - a more realistic view of what to expect.  For 7 years I could show nothing but positive returns, but not any more and I'm OK with that.  I'm at peace with that.

The reality is that very, very few people have the ability to stick with a strategy.  Whether it's an intraday or long term position trading system - it doesn't matter.  They all require a certain amount of discipline and conviction.


Pull backs in trading systems are natural.  Let me repeat that again.  Pull backs in trading systems are natural.  The 'Freedom' system, however, goes a step further when one looks at the 6-month rolling return.

As you can see there tends to be a natural and cyclical 'ebb and flow' in the system results.  The ebbs (and flows) differ in magnitude and duration, but the point is they repeat over time.  Also, notice that for nearly a decade we have periodically seen the 6-month return move below the 0% mark.

Translation:  there are 6-month periods when your total return is 0%.  Yes, that means flat.  

Again, this must be taken in the context of a long term system.  If one wants to realize the higher returns this is a reality of this system, and likely many others like it.

If you have ever considered allocating a portion of your capital to a long term futures position trading system NOW is the absolute best time to get involved.  If you are interested, or just curious about the system, please send me an e-mail at a.grant@ambgtrading.com.

I would be more than happy to answer your questions.