I thought it prudent to review an alternate scenario to my trading during the recent game period.  I take on board that some trades I probably exited too soon, on my belief that the market was due to let off some steam. 

As I write, the market has indeed dropped substantially in the last week and looking like it might retest earlier March lows.

For this back-testing, I stuck to my trading plan – whereby I didn’t exit until the share price closed beneath the stop loss for two consecutive sessions.  Which extended the duration of some of my early trades, especially PDN.  Once the stop loss was activated, I’ve simply taken the next stock I entered as its replacement.

Just out of curiosity, I’ve also included a straight buy and hold of the original five shares selected.  I read with interest that the winning portfolio was a simple buy and hold strategy (Holding AWC, MGR, GDY, BKN).  However, I have doubt that this is a good strategy as after the recent drops in prices – those same portfolio’s would not look so rosy if the owners had continued to hold.

Scenario One:

Buy and Hold – the original selection of shares; just sit and wait (not a very exciting way to trade!)

WPL, UGL, PDN,  SUN, JBH

Prices at close on 3/6/09

PDN would have been the highest earner at $4,580.

Profit;   $15,871

Scenario Two:

Buy and Hold – but exit when stop loss broken by two consecutive closes beneath it (following my trading plan to the letter)

If a position, in theory was closed out, I have simply taken the next stock I purchased to replace it – not a faultless way to back-test – but will suffice.

Profit:                                            $17,233.19  (+34%)

Overall number of Winners:   9
Overall number of Losers:       1
Biggest loss:   $705 (COH)
Biggest win:    $4790(PDN)
 

So this turned out to be an interesting exercise.  By sticking to the plan I could have doubled my profits and made only 10 trades as opposed to 15.  If I would have been really brave, PDN also triggered another buy during the trend, and would have been an opportunity to pyramid into this position.

What have I learnt?
 

The game closed without much difference from my last update.  Overall I was pleased with how my trading went – obviously still more to learn and skills to refine!

In total I made 15 trades over the 14 weeks and my average time in a trade was 18 days.  The broker fees roughly came to about $900, so it does make a large dent in your profits.

My total profitable trades were:      $9,031

My total losses were:                          -$1,394

After reviewing some of my trades, my biggest challenge to master appears to be closing out of positions too early rather than adhering to my initial stop loss mark.  This happened with PDN, which if held onto would have clocked an additional $4k to my account.  I also did the same with BHP, when I confused the trailing stop with my initial stop loss – stupid mistake caused by lack of attention to the details!  This would have changed the position from a (-200) loss to a profit of over $1000.    Patience is a virtual, they say. 

The next game starts in July, until then I’ll be taking a look into some SmallCap companies as they seem to be some big gains in these smaller shares.

Here are the stats from the portfolio I had running during the ASX share market game, as at close on 3^rd June.

Cash on hand                    $21,480.83

Share holding value       $36,208.30

Total portfolio worth    $57,689.13

The story concludes:
Profit/Loss to date:          +15%

ASX 200:                               +16%

Final  week:
Closed trades:        -  
Open positions at close:     WOW, OSH, LGL

Overall number of Winners:   11
Overall number of Losers:       4
Biggest loss:   $673 (COH)
Biggest win:    $1984 (WPL)

 The ASX game closes today.  It still amazes me that some players have nearly doubled their money – I wonder how they do it?

I guess I’ve been playing rather conservatively even though it’s only a game and there is no risk!  It is great practice though and I’ve managed to fine tune my trading plan – and curb those tendencies to deviate from the plan – however tempting they are!

Portfolio total $57,721.83

National performance (at close 02/06)

National leader $99,831.89

National average $57,521.66

Your ranking (at close 02/06) 

National ranking 5895 of 13406

The story so far:
Profit/Loss to date:          +15%

ASX 200:                               +14%
Cash on hand                       $ 21,480.83  

Share holding value           $  36,241.00

Total portfolio worth        $ 57,721.83
This week:
Closed trades:        -  
Open positions:     WOW, OSH, LGL

Winners:   8
Losers:       4

Biggest loss:   $673 (COH)
Biggest win:    $1984 (WPL)