Since I started using my process in its current form — roughly since the start of October —  I have made money in commodities and equities but not in FX (after a bad start to this year, all the numbers look bad; figures are based on closed trades up to yesterday)[1]:

  • Commodities +0.40%
  • Equities +0.31%
  • FX -0.98%
I increased my leverage in November as I thought my new process was starting to work, which means that earlier trades count for less in my actual P/L. Standardising to the new level of leverage gives the following returns:
  • Commodities +1.13%*
  • Equities +1.12%*
  • FX -1.01%*
In the 12 months to 31 Dec 2010, I made the following actual returns[1]:
  • Commodities +5.3%
  • Equities -1.5%
  • FX -1.7%
I made money in 2010, although at +2.1% returns were at the bottom end of my first-year objective of 0-10% (note that for simplicity I have fudged the denominator, using a rough average of total assets through the year; this doesn’t change the basic story). 
Standardising returns to the current level of leverage gives the following returns:
  • Commodities +9.3%*
  • Equities -3.0%*
  • FX -3.2%*
I take three main points from this analysis:
  1. I can actually do this.
  2. My work on improving my equity trading method appears to have paid off (although there are not many data points).
  3. FX continues to detract value.
The next thing that I need to do, therefore, is to improve my FX trading. I think that the main problem with FX markets is that they are less prone to smooth trends than commodity markets. Thus it would make sense to trade only in FX markets where there is a very clear technical and fundamental trend. Looking back over my trades, I have had winners in this kind of market — EUR/USD, AUD/USD, GBP/USD in the spring of 2010, USD/SGD when the currency band was moved. I need to learn to keep to markets like these.
* I have marked numbers that are not actual realised returns with a star
[1] Calculations are based on IG Index records. Trades are recorded on the date on which they are closed. This means that the numbers here will be different from equity-based monthly returns. In particular, a large (over-leveraged, but I was just starting out) open position at the start of 2010 has made my equity performance figures look bad all year.