Wednesday, January 24, 2007

IB Account Profit and Loss Curve

The chart shows the cumulative profit in my Interactive Brokers account since I opened it in late October 2006 trade by trade. All closed trades are shown here. Initially, things were a bit erratic and then an Aussie Dollar trade went very bad. I shorted 3 contracts and the AUD rose 1 US cent against me... that resulted in a loss of $US3000. Since then I have had a pretty smooth ride along an ascending profit curve. As I blogged, yesterday, that might make me a bit too complacent. In fact I made a new short AUD trade yesterday - but only 1 contract - and again the AUD rose against me. But this evening, on the release of the SPI report in Australia the Aussie plummeted and that trade (now closed) turned out OK.

The chart also shows the importance of cutting losses. If I just halved the size of those two big losses the track record would look very different.

I did one of these reports before for non-futures trading. It also looked pretty erratic. I am still waiting for the decisive breakthrough where my trading looks consistently profitable.


sergeson said...


I caught your comment on the moneymaker blog, regarding leverage in the stock market. Can you provide a link for that? Lord Google keeps wanting to show me the stock market crash of 1929.

mOOm said...

There are four main types of leverage available in the stock-market:

Margin loans: let you borrow 50-70% of the value of the stock.

Options: let you borrow almost all of it effectively if you are dumb enough to buy really out of money options :)

Futures: let you borrow between 90 and 95% of the money.

Then there are leveraged mutual funds which typically borrow about 50%.

Besides this, there are low and high beta stocks. High beta stocks move much more with the market for good or bad than low beta stocks.

So try words like:

"margin loan"


"leveraged mutual fund"

in Google and see what happens.