Great performance, but an important lesson to be learned
Cutting your losses makes a big difference in performance and the following charts prove by riding winners and cutting losses you can outperform the market.
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Our batting average
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Have a HAPPY THANKSGIVING!
A BIG THANKS TO BJESSE (BWT MEMBER) FOR PUTTING THIS TOGETHER!
UPDATE TO THE POST ABOVE BY BJESSE:
A couple days ago I posted Josh’s YTD trade performance for all but 68 of his 2010 trades. Today I filled in the holes, which consisted of trades closing early in the year. Here are the results for all 614 of his trades YTD. Again, any errors are mine.
Note this confirms Josh’s long term average of 60/40.
I have also included a plot of the Gain/Loss percentage for each trade. If anyone ever doubted the wisdom of “keep your losses small” this should convert you. Going through the trades I was struck again by just how disciplined Josh is at following his sell rules, and how that preserves profits far more often than it results in missed gains.
I have always found it difficult to let my winners run. JH is a master, as this shows; his average gain is 33% with a standard deviation of 44%.
I find these results nothing short of remarkable. Awesome even. It is not a trivial matter to translate Josh’s trades into profit dollars in your own portfolio. But as I said before, there is gold to be mined here.
Thanks Josh and BWT! The CEO should give you a huge bonus :)