2016 Year End Review

2016 started out slow with losses in January and February giving me a $399.35 loss for the first two months. These losses were finally fully recovered in September, giving me $25.16 profit for the year up to that point. Two good trades in November and December brought my total profitĀ for the full year to $646.13 and an ROI of 10.8%.

Admittedly it was painful to be in the red most of the year. Though discouraged, I never lost faith in this trading strategy. After the losses of January and February I only had two losing trades the rest of the year. My over all win loss ration since starting this blog was above average with 76.4% winning trades and 23.6% loosing trades.

It also really helped that my gold and silver investments almost doubled the size of my brokerage account. Even with the recent sell off in gold and silver I am still up substantially for the year.

Before using any trading system it is important to back test or paper trade the system until you feel comfortable with it. Also keep detailed records of all trades made so that you can see how the system performs. Follow the trading system consistently, take every trade as they come, you never know which trade will be the big winning trade that makes this system work. Keep your position size small enough so that the inevitable losing trade will not substantially affect your ability to continue trading. It is the occasional big winning trade that makes this system work, you do not want to miss it, take every trade.

This trading system should only be one part of a balanced investment / trading strategy. Diversification works. My gold and silver profits really made it easy to continue trading. In fact my trading losses were insignificant compared to my silver and gold profits.

Usually I have most of my capital invested in dividend paying value stocks, just keeping enough of a cash balance to cover potential trading losses. This gives me three potential streams of income; stream one, capital gains from the stocks I own; stream two, dividend income from the stocks I own; stream three, income from my trading system.

What 2017 will bring is anybody’s guess. We still live inĀ uncertain times, there are black swans every where. The odds are for a serious recession, stock market correction and inflation, read here. I continue to keep my trade positions small and trade conservatively. I am short the S&P 500 and am short bonds, my gold and silver investments are hedged against inflation.

Hope for the best, prepare for the worst. I have a feeling 2017 will be a wild ride, hang on!