From time to time it’s important to review your trading objectives and see how you are performing against stated objectives. From a return point of view, the AtticFund has done OK. I have returned nearly 10% in 7 months. I would have liked that to have been more (to be honest, in the current market I would have like that to have been a whole lot more!), but I am where I am and I simply need to accept that.
I still trade a relatively short time frame and I have not developed a balanced portfolio which was what I originally set out to do. I am far too cash heavy which is symptomatic of two things: 1) I am bearish the economy (and prefer long positions) and 2) I am far too risk averse.
Over the next couple of weeks my plan is to develop a more holistic, long term approach to my trading – I might perhaps even call it investing!
I’m sticking with the FTSE 350 but I’m going to develop a couple of trading ideas, which I will then use to build what I hope will be a balanced portfolio.
As I type, my thoughts on developing that portfolio are as follows;
1. Where are we in the economic cycle? – Is the recession over or has the recent rally been a dead cat bounce? I’m going to look at GDP and ISM surveys, together with some sector analysis in order to reach a decision.
2. Once this decision is clear I will consider what type of trading ideas make sense in this type of market. I’ll use the image on business vs stock market cycles in order to focus on some sectors for further analysis.
3. I will consider how I can hedge this portfolio in order to protect me should I have got the prevailing direction wrong.
4. In order to stay in a position for longer, I may need to reconsider where I place my stops and targets. Given I am able to very precisely size a position (because I spread-bet) my money management strategy should not need changing.
5. I will re-visit my earlier objectives of having 5 (or somewhere round there) positions at any one time and work on finding enough opportunities to find and place 5 trades. I’ll try and keep the portfolio invested at around this level.
