Jan 2014 Performance Report
Dear friends,
We hope that this message finds you all well. We have some interesting news to share with you this month. For those wanting to cut to the chase, and view our recent performance, of course you can always do so at any time by visiting our performance table (which is updated monthly – note: there is also a pdf download on that page which many find is easier to view). Overall with our updated and revised strategies the programs did very well in January. Most notably was Valor FX which banked just shy of a whopping 15% return.
As some of you are aware, we have made some fairly significant changes to our overall trading portfolio last month. Most notably these include shelving the Franky Forex strategy for the time being (we are saving this space for our Futures Strategy which should be ready this month). Then also the decommissioning of our previous Stone Fund strategy (after trading with it for nearly 3 years) and rolling out its new and improved counter part.
This was a tough decision to make, but with the Stone team breaching some of their trade rules and the team splitting up, we believe we have made a good decision to trade with the Italian partner of the Stone Fund. Not to mention their improved strategy is simply amazing in terms of risk:reward, you can view the live myfxbook performance here.
While shuffling our portfolio around was not without it’s frustrations and lost time, we believe that the end result is that we are now sitting on a very, very attractive portfolio which represents our best one yet. Our current portfolio consists of the following 4 programs … (you can click on the name of each to go to their dedicated pages)
The beauty with using only these 4, especially with the new and improved strategies for many of them, is that they are very different from one another, yet they all tick all the boxes for us in terms of cardinal rules of trading. All are intra-day, and use tight stop losses to reduce exposure and lower our overall market-footprint. Our data mining (spanning over 12 years) has shown that strats with average trade durations under 8 hours, and with average SLs under 60 pips have the greatest change of profiting over the widest range of market conditions in the long term.
All of these programs fit the bill. However they are very different from one in other in terms of their trading strategy, the pairs they trade, their risk profiles, and whether discretionary or systematic – which provides TRUE portfolio diversification across a single asset class, all while staying within the confines of what we look for in a general trading strategy. Over the coming weeks we will be profiling these strategies in more detail at the request of many of our clients.
Perhaps THE most important document to look at to support this, is simply our performance table, which includes our average monthly performance of all of our programs trading in parallel with each other. This link was shared above, but you can view this HERE (with a pdf version HERE).
As you can see, with the 4 trading programs working together in 2013, the net result was ZERO losing month’s last year, and well above average returns. When we overlay our trading data we see the same thing during periods of drawdown – they balance each other out very well. This is exactly the kind of non-correlated diversification most hedge funds strive to achieve (with different asset classes) but have a difficult time achieving without locking in to very long-term investments. So despite some shuffling along the way, we feel we are in very good shape for the 2014 year ahead.
Minimum Investment Considerations
Based on the above, our firm recommendation is for our existing and perspective investors to diversify their funds across all 4 of the programs. This would require approximately a 20K USD investment at most of our brokers (Stone v2 requires a 7K minimum and the other 3 approx $5K). Accounts trading with less than this will still trade, however the risk will be slightly increased as these balances are based off of trading with the minimum lot size of 0.01 lots which is offered at most of our brokers.
We realize that $20K may be a drop in the bucket for many of you, but also a rather substantial investment for many as well. For the record one does not need to participate in all 4 funds, however for those that can afford such an investment, we feel that by doing so it is simply the safest and most profitable way to take advantage of the full portfolio collectively this year. $28K USD would actually be the IDEAL investment amount as that allows approx $7K to be split EQUALLY amongst the 4 programs for a perfectly even diversification. We are ourselves have, or are funding each of these accounts and using our live accounts as the Official Reference accounts for each program at our Australian brokerage starting this month going forward.
Moving Forward – Franky Futures and other News
We will soon be rolling out our first ever futures program as we have stumbled upon a very unique opportunity and it will also help us to meet this request offered by many of our clients. This is a unique offering as we are more or less getting in on the ground floor in a partnership role of something very special. The program manager for this is fairly well known and a high profile figure in the European investment world. We are quite excited to be working with them in this capacity and hope to have things moving along shortly.
Lastly we would like to extend a big thank you to all of our investors for bearing with us as we implemented the above mentioned changes. This business is not always easy, and things do not always go our way, and we are sometimes faced with making tough and crucial decisions and changes, but we will give our commitment to always do our best, to keep improving, and most importantly to always keep our communication strong.
As always we welcome a chat with any of you at any time, and to say we are excited about what this year holds in store is an understatement.
To our forward progress!