September was a decent month for the J. Arthur portfolio, earning 2.21% on the account balance. I’m trending slightly above the yearly target of 24%. It’s safe to say the trading plan continues to operate as designed.
Yet it is important to look back at what happened and see if any improvements can be made.
First off, I have become an even bigger believer in true diversification.
I say true diversification because, at its core, I view the entire stock market as one correlated entity. Sure, it’s good to have ETFs that include lots of different underlyings. That, at least, reduces the chances of a crazy move. Yet, if the S&P 500 starts blazing in one direction, usually the entire equity market reacts the same way.
That’s why I’ve tried to balance out my positions with farm crops, currencies, and energy.
After this slight portfolio shift in September, my currency and farm trades were my best performers. A few of them hit 50% max profit within 10 days.
The products that really worked well were /6A (Australian dollar), /6C (Canadian dollar), /6B (British pound), /ZW (Wheat), /ZS (Soy), /ZC (Corn).
Needless to say, I am very happy that Tastyworks finally released futures options for trading. It had been impossible for me to get the kind of diversification I wanted without them.
Another plus for the month was that I didn’t have to close any losers. My last losing position was closed a month and a half ago. My win rate sits at 94.87%.
Also, I didn’t have to make a lot of adjustments; I just kept looking for a good trade each day with a goal of balancing out my diversification.
I do have a GDX position that I had to adjust until it became a straddle, and now I’m just waiting until it hopefully decays into a small winner. That position has been on for 80 days, which is rare but it happens.
One final nugget of wisdom I will reiterate is that it’s CRUCIAL to be able to just let the positions play out. A great trick is to use a spreadsheet to track lots of metrics about your trades, or work on building your trading system (maybe learn a scripting language). This way, you can still feel like you are improving your trading without getting frustrated with your positions and messing with them.