Ed Mamula.com

The Performance Chart has been updated and cleaned up.  It now shows the true performance of the Cable Glider systems and my actual performance net of all my expenses, additions of capital, and hedging strategies.  Prior to June 1, 2007, I had no hedging strategy or alternative systems, so my actual returns are the same as the unhedged Cable Glider returns.  After June 1, I established a hedge, and it’s easy to see how much smoother the sailing has been since then.  It also makes it easy to understand the comment I made in an earlier post about the negative effect of establishing a hedge at an equity trough…one can see from the chart that I did just that.  As of today, the unhedged Cable Glider has matched its previous peak, and the hedged portfolio is making a new high when measured since its inception in June. 

Full time trading has been quite an adventure and a great learning experience so far.  The added pressure of making enough money to pay the bills and keep the account growing has been a challenge.  Many thanks to everyone that has contacted me over the past few months with thoughts and suggestions.  This solitary trader’s life would be a lot more lonely without them.

Finally, I’d like to say happy belated birthday to the Cable Glider itself;  as of today, the system has been trading live for 13 months, with the unhedged version returning approximately 285% and the hedged version returning 205%.  I’ve endured some pretty scary drawdowns as well, but I continue to refine my systems with an eye on dampening drawdowns, and the performance since June makes me feel good.  The recent drawdowns were similar in time length to the previous ones, but not nearly so in depth.  Here’s hoping that the good performance continues.

 

First and foremost, anyone who is paying attention to the markets knows that the dollar is being taken out to the shed and crushed against everything.  It is with this backdrop that the Cable Glider system has achieved a new equity peak on a single trade this week…a trade that was quite nice, but may have ended too early, as the British pound seems to be continuing to run higher after the Bank of England meeting this morning.  I continue to use the same event filters that I’ve always used to keep me out of the market today and tomorrow, however, this action is a repeat of what happened in May and June of this year for the Cable Glider; namely, a down month followed by a new equity peak and a slight regret at not trading the action subsequent to the BOE meeting.At any rate, I can only hope that this entire month will treat me as well as June did. 

Now then, my new asset allocation strategy is : 75% Cable Glider, 25% Euro Ranger (rebalance monthly).  Euro Ranger trades at lower leverage and serves as a hedge to the Cable Glider that I hope will be superior to holding a simple cash reserve hedge.  The Euro Ranger (ER) is a mean reversion style system and shows low correlation to the Cable Glider (CG).  Moreover, the ER trades with profit targets, so it’s trading profile is quite different than the ER.  CG is analogous to an aggressive growth fund and ER is analogous to a bond fund.

The new allocation plan brings me one step closer to becoming a true pro…in my mind, this is someone who trades a diversified set of systems and markets, and doesn’t get emotionally married to any one system.

Here are the month to date results for the combined program…significant positive performance has already caused allocation drift. 

# winning trades (CG/ER) : 1/1

# closed losing trades (CG/ER) : 0/0

CG Return: 27.0%

Hedge Return: 1.6%

Current Allocation (CG/ER): 79% / 21%

Total Return: 21.1% 

I’m going to go enjoy the win and try not to focus on all the money that I might have left on the table…after all, such is the nature of a trend-following system;  we never sell at the top, because we make no effort to predict where the top will be!