Hi guys, hi from Andrea Unger.
What I want to show you today, we are close to the end of the year, is what happened in trading, in general, for myself, my systems and related to trading in 2018 so let’s go…
First of all, this picture is the Barclays CTA indexes, this is published from Barclays and it’s a snapshot on the performance of a group of CTA, commodity trading advisors, manage futures actually and they have different groups here.
What immediately comes to be noticed, is the cryptocurrency traders index which shows a heavy loss, which is not astonishing, we know what happened in crypto, so this is something that can be normal, but what is not really normal is that we see a lot of red in this column up to December the 20th so it’s a year today ad more or less we can say this is a snapshot of 2018.
We see only the currency traders index here is positive and then discretionary traders index 2%.
If you look at the systematic traders’ index, which is all those CTA who claimed to work with trading systems, they show a loss of 4.69%.
You might argue that the 4.69 is not a heavy loss, it’s not actually, but if we consider the average return, the yearly return on this index, which I know is about I think 8% or so, this case 4.69% is a heavy loss because it is close or it is the same size let’s say, of the annual return.
So this was a very bad year, not only for systemic traders but for traders in general because apart from the agricultural traders’ index, everywhere we look at we see some losses but for these two I mentioned before.
So this reflects a difficult year which I also know was difficult, hearing from friends fellow traders I’m in touch with, mostly systematic traders they had trouble with their trading system.
So what about my systems? The same thing, a disaster!
I must be sincere, honest, this is a bad year… bad year you can see it here this is the equity line produced by the systems that have been traded in 2018 and this is from the software Titan I use it reflects the blue curve the results of the systems as to the choices that have been made.
You can see that after a good start, a really good start in the first months of the year everything was lost afterward, and only thanks to a decent recovery in the last weeks, the year so far is going to break even more or less, which is disappointing.
The red line is the result which I would have obtained if I had traded without filtering the systems through my algorithm, which I don’t obviously, but it reflects the power of the algorithm I use. So it’s good, I would have lost more not filtering anything.
In that case, the systems would have been filtered only in case I had not enough money on the account to trade, to duly put this position size then.
When this happens I normally do, I do it in any case, but especially in cases like this where we went through a really disappointing year, I have a look into different sectors to understand if there could have been some specific weakness in some sector, if some sector or some instrument has a changing behavior, no more responding to my systems or things like that, I go in depth to see where the problems could be.
Now first, month after month you see actually what you’ve seen in the curve, you see a good start, which was something that was exciting and then we have here a disappointing spring and the start of summer, only August was positive in summer just for those who want to switch systems off in August and thanks to a great November the whole picture shows now a break even if November had not happened, it would be a really heavy year to go through.
In any case here are the curves, these are no longer reflecting the real trading, these are curves where I pretend I had only a certain group of systems, same amount of money but distributed over a much smaller amount of systems and position size of the total amount of money.
Above here all my systems on currencies and here below only those on EuroFX, I trade futures so I have… the difference is not very strong you can see, the equity lines are really very very similar, because actually I have FX systems but I have only one system on Australian dollar a couple on Japanese yen and a couple on British Pound and one on Swiss Franc all the rest is a EuroFx so actually EuroFx is producing most of the returns on currency group and this is an alarm bell because we see that after the good start also EuroFx showed constant losses.
Here you have also a black line, which I introduced for this analysis and this is the result I would have made trading all my systems always with one single contractor.
This can be done if you work on the same sector because more or less you can put things together without mixing up completely different scenarios in terms of money because EuroFx is always EuroFx I’ve not mixed cocoa with Silver for example.
So also this black line shows that all my sisters, the group of my systems is producing constant losses, so there is something I have to do or to look inside the current situation specifically euro-US dollar.
Gold shows similar problems, you see here losses, losses, not even a good start here, always losses and I can confirm that gold started behaving in a different way early in 2017 so it has been now for two years that we see a different behavior of gold that specifically it is no longer responding properly to intraday breakout strategies.
I say this because I think it can be useful for those of you who trade gold or who intend to trade gold. The situation here is dangerous because also in this case we see a constant decrease in the equity line produced by Gold systems, so this is another area where there is a need of putting some efforts.
DAX future, DAX closing break-even more or less, but it’s going nowhere.
DAX has been in some troubles after the quantitative easing that has been introduced some years ago and after that it has been behaving in a weird way, considering also that now, just this month we are facing new extended session of market hours in DAX it’s a good time to pause systems on Dax or most of them, but for some intraday things maybe most can work but all the others it’s better to be paused for a while to see how the market will eventually change its behavior now that there are many more hours in the session which we had not seen before.
It might affect many things, it’s better to stay and wait and then make some analysis, maybe in three, four, six months or so.
Bonds, once I mentioned that I don’t like Bonds, I should like them because they produce profits and in this case, the unfiltered systems even worked better than the filtered that had a very small amount and they produced money constantly, also the single contract line shows a constant slow growth.
Bonds are good, I don’t like these systems, I don’t like the way they trade, but I must admit that they are saving my portfolio so far, so bonds are in good shape.
The energy sector is not really in good shape, you see it made money, it made a little bit of money here, thanks for the second half of the year, filtering strategies produced less money than not filtering them, but this would have been probably too much of rock and roll to trade the red line and I had a deeper look into energy itself splitting crude oil and gasoline.
So both produced profits but you see gasoline behaved much better in the last part of the year and the only problem with gasoline is that I don’t have so many systems on gasoline.
I have 4 systems.
I have more on crude oil and gasoline has shown to be in good shape even though some friends of mine, who have other systems they developed on gasoline, claimed to have started seeing some troubles lately.
So my systems did keep on making money but I have to watch this closely because things might be in a changing phase.
The grains was a disaster, a complete disaster.
It has been in a disaster mode for years now and actually, I can tell you, soybeans which is the most important probably has completely changed its behavior already in 2013 or so. No longer trend-following on intraday and completely different behavior.
I’ve never put too many efforts in finding new stuff on grains.
I think it’s definitely time to work on this.
The miniS&P500 have a family of systems which I don’t like but which made money and they made even decent money, you see the red line is astonishing here so if I had not filtered my systems I would have made a lot of money but I filtered them and I still made money on miniS&P but not to the extent I would have made not filtering anything.
But I’m happy to filter because the risk of not filtering having a heavy correlation among all the systems would have been too much actually.
So it’s good that filters are there and it’s good to see that miniS&P, which is an efficient market, so it’s unlikely to change too much and this is what helps because the systems continue producing some profits.
Now let’s go outside of direct trading and let’s see what happened during the year and how I found new opportunities.
The first one was in January when I was invited to hold a seminar in Hong Kong and here you can see me sitting in the middle of the class but also Stefano Serafini sitting close to me, champion of 2017 and Riccardo Parise the Italian friends know him.
These two guys joined the seminar, I was very happy to sit with them seminar organized by Mrs.Teresa Wong sitting here to my right and great seminar and the real opportunity I found apart from the seminar itself, was that I discovered the Hang Seng future index and I can tell you I like the Hang Seng future which I ignored before I knew it existed but I’d didn’t know anything about its behavior.
I can tell you so far it’s still a very clean behavior so I liked it, I developed strategies and I started trading it.
My greatest difficulty and the reason why I had not considered this before is that IQ feed which I use as a data feed, is not providing any data on Hang Seng future so I use the CQG data from my Admis account of the world cup advisor, which is not the best solution, because I don’t want to mix too many things but it’s a way that makes so far trading possible on the Hang Seng future.
In October I had the pleasure and the honor to be invited as a speaker at the 31st IFTA annual conference in Kuala Lumpur in Malaysia.
This was a big flag in the conference center, you can see my face here just below the Prime Minister of Malaysia, great opportunity also in this case really, big names, this is me speaking but here the head here is from John Bollinger, who was looking with a bit of annoyed face but he said it was liking my speech, I hope he was not too much bored.
Here I am with Martin Pring and Perry Kaufman, two great names two great minds and this is me doing nothing.
It’s always a pleasure to attend these meetings because you listen to a number of presentations and you always get a really great content which is always useful.
Last but not least in November I was invited to Shenzhen in China for a local trading contest Awards ceremony.
This was the room of the ceremony, you see how China shows outstanding numbers everywhere.
This was a great event in any case and you can see on the mega screen when my pic was showed it was a great emotion for me.
This is me presenting and I can tell you that Chinese markets are incredibly interesting.
So far, we as Western traders are not allowed to trade those markets, but I am really waiting for the frontiers to open because those market offer incredible opportunities for traders, so be ready, keep an eye on China because China is the present and future of trading.
It’s really interesting for us traders.
We had also a very interesting panel discussion with some of the local traders, all these guys here sitting with me.
It was a great experience, it’s always great to exchange opinions with other traders especially if they are from other parts of the world with completely different cultures and trading cultures.
This was my 2018, I now prepare first of all for my the Christmas holidays, by the way, I wish you and your families a Merry Christmas I don’t know actually when you are watching this video, but hey I do wish you this now and I hope to rest now and I’m preparing for 2019.
In 2019 I said I will be working on those sectors where I’ve found out there are weaknesses in my system in my portfolio of systems and maybe I will have opportunities to travel around the world and discover new ideas as I did in 2018, in any case when this happens, if it happens I will try to pass over to you some of the most important information I gathered.
That’s it guys, this is Andrea Unger, ciao from Andrea Unger, see you next time ciao