Monthly Report 

1^st December 2006  – 31st December 2006

2006 Performance  +53%   MDD -9.29%

2006 finished with a +3% month and an total return for the year of +53%.   A solid performance, which I am pleased, but one which, admittedly, I feel could have been better.  

I've always considered year-ends with special significance; and if there was ever an opportunity for navel gazing, it seems natural to do so at this time of year. 

I've now been trading full-time since May 1999, almost 8 years, pursuing my life's dream.  With my wife,  we moved to our piece of paradise - Head Office - nearly 5 year's ago.  I returned to my first trading love (f/x, what else?) also around 5 years ago and have been publishing these reports every month for 3 years.  I have been fully automated for two-and-a-half years.   The icing on the cake is that the funds management business (Zone Capital) has just celebrated a successful first year of operations.  If there was ever a testament to the power of a dream, this has got to be it!

Doing a comparison between this year and last, I remain of the view that I held last month that I have been overly cautious in my trading throughout the year.   

Last year (2005) was exceptional and this enabled me to trade quite aggressively throughout the whole period, however 2006 started off with an early drawdown which I think was partly the reason for my under-trading.  

Looking at the above figures and associated equity curves, I've come to the conclusion that I was trading approximately 2/3rd's of what should have been my optimal level.  While it must be said that hindsight is a wonderful thing, as traders there is no escaping the fact that we need to tread a very fine line when trying to maximize profit, while keeping drawdown and account volatility within manageable levels.  Getting this fine line right is one of the never ending challenges of this business.   In conclusion, and by looking seriously at all the performance statistics I have managed to gather, I'm of the opinion that optimum trade size would have been closer to 50% more than I was trading, and that this would have resulted in a 100% return, with a MDD and daily variance that I could still live with.

No regrets, but a few lessons learned.   I'm looking forward to 2007!

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To all readers, I'm constantly amazed at the numbers of you that regularly visit this site.  It's really gratifying to see so many people that obviously share this passion.  To you all, I'd like to wish you the very best for the coming year, and truly hope that your dreams come true.    Good trading!