Wednesday, February 6, 2013

ABC Scorecard


  • Here at Archbridge Capital we are judged on our performance. We are done so continuously and relentlessly. And we exist because judgement has been favourable. In that spirit we thought it was worth tracking how we did on our published research, even though our published research occurs after we have already entered into the positions we advocate. 
  • We have published a number of views/trades in our publications (list and results to date below). 
  • Out of the seven suggested trades four have been profitable, with two very much so. Three have been stopped out at small losses. 
  • Overall the portfolio has been profitable. Please note that it is the fact that profitable trades are much more profitable in comparison to losing trades that assures the portfolio overall to be profitable.
  • "There are good trades that make money and bad trades that make money. There are good trades that lose money and bad trades that lose money. Money in the long-run is made from continuously taking the good trades." - Old Trading Adage.

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[Technical Note: A number of our readers have asked us about exiting trades when they go against us and we thought we shed some light on this: In terms of getting out of positions we would not allow positions to go more than 2-2.5 standard deviations against us (technically we would note that a lot of our readers tend to use ATR and here we would call for an approximate 2 ATR against us. ATR of the last 20-30 days is fine).]


THE GOOD

Sell the Yen against Dollars: Selling the yen has worked well against any currency pair. We have published this notion on November 25 when it was trading at 82.08 against the US$ and it has gone relentlessly in our favour and is currently trading around 93.62. Though this trade has further, perhaps much further, to run, the 'easiest' part seems behind us.

Buy the Euro vs US$: On November 14th we wanted to make our readers aware of the bullish stance that we had of the euro. At the time it was trading at 1.27 and is currently trading at 1.3534. This trade has hit our target and will be evaluated by us only from the sidelines at the moment.

Sell the US$: the trade weighted index on the date of publication (November 14th) was trading at 81.31 and is currently trading 79.74, though it saw a low of 79.00. Overall the trade made us money, more than 1.5 big figures while more than two big figures at its best.

Buy Aud: This trade is pretty flat as of this morning and has not moved much from its publication on November 14th where it was trading at 1.0379. We would note, however, that it did trade up to a high of 1.06 and anyone with a trailing stop loss would have locked in a small profit on this trade. We are on the sidelines after having done just that.


THE BAD

Buy Gold: This trade did not make money, since when we published our view on November 14, gold was trading at 1734.5$ while now it is trading at 1676$. Our only saving grace on this trade is that we did suggest that it would 'take a rather long time to be successful' and though that is still the case we did - however, get stopped out on this trade.

Sell Soya spreads (July-Nov13 spread): This trade lost money and we were stopped out. Enough said.


THE UGLY

("ugly" because the fundamentals of the Brent-WTI trade are sound and an unexpected technical fault has stopped us out of this trade)

Buy Brent-WTI spread (June 2013) or short Energy Spreads: 

This trade was suggested on January 23rd 2013 and worked well, until the key reason for the trade unexpectedly and suddenly changed. The key reason for the trade was that the WTI contract was trading at a large discount to the Brent contract, because of infrastructure issues, which locked in the WTI crude in the Cushing (Oklahoma) region from where it cannot reach the areas where crude would be used. However, the Seaway pipeline reversal would have started to accomplish that, i.e. it would have enabled the crude to leave Cushing and get to the areas where it would have been refined and used. That is why the trade worked very well for a while. However, unexpectedly the Seaway pipeline went from transporting 400k b/d to only 150-175k b/d due to issues with the Jones act and technical problems. These problems as of writing will only be solved some time in Q3 or Q4 and could take even longer. The market then rightly took this information and reversed course. We exited as soon as we heard the news. Hence we watched our tidy profits turn to a small loss until the news was published. Such is the world of trading. This trade will be on our radars going forward, as the over workings of the fundamentals are clearly in one direction and the pipeline 'complications' are there to be solved.






Disclaimer: This posting is for information purposes only and is not intended as an offer,recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation or warranty is made that this information is complete or accurate. Any views or opinions expressed do not necessarily represent those of Archbridge Capital AG.  This information is not intended, tax or legal advice. You also acknowledge that the information should not be construed as a solicitation or offer by Archbridge Capital AG to buy or sell any securities or any other financial instruments or provide any investment advice or service. Unless otherwise stated, any pricing information given in this posting is indicative only, is subject to changes and does not constitute an offer to deal at any price quoted. You should be aware that returns can be volatile and you may lose all or a portion of your investment. Past performance of any investment or trading tool is not necessarily indicative of future performance or results.