Q3 Market and Performance Analysis

Market Analysis

Although on the Monthly index graph above, the quarter appears an overall upward trend, volatililty made it difficult to catch this trend. Several larger swings caused a lot of uncertainty about whether the market would break out upwards or downwards. Contradictory commentary and hysteria in Gold markets caused many to speak about a second crash.

Investment Performance

401K investments did extremely well, with a 13% gain in portfolio value, despite the lower contribution levels that I began in Q2. The was probably due to the rebound after June, and the concentration of investments in Small Cap and Small Cap value funds.

This performance wasn't reflected in my active trading account, with only a 3% gain (although this reflects no additional cash contributions) .   After transferring $10,000 to a new TDAmeritrade account for active trading, a  number of very painful learning experiences followed as I tried to apply the learning from the Professional Trader education in choppy market conditions.

I was preoccupied with shifting my focus from a position trader and longer term investor to a shorter term swing trader. I also sold many income positions to realize what profits were left in them, due to uncertainty about which way the market would break out.

By the end of the quarter, I had created a detailed trading and investment plan, and was developing some much more rigorous trade entry and exit strategies for short term trades. I also developed a much more detailed 401K strategy to be implemented over Q4.

However, this focus on short term trades left me sitting on the sidelines when the market took off in September, and I was unable to capitalize on the growth in September due to focus on short term trades at the expenses of correctly seeing what the overall market was doing.

Overall target investment growth is still down 6% on plan, but an overall increase in Portfolio Value of 9% for the quarter was acceptable, given the number of mistakes I made increasing my skills after the professional trader education. 

Lessons Learned:

1.  In choppy markets, it may be worth trying short term swing trade, but it can potentially just be better to zoom out to the big picture, watch for potential longer term patterns to emerge.
2. Learning experience: The biggest market moves happen over 1-2 two month timeframes, not 2-10 day timeframes. Swing trading can be exciting, but I am left wondering if it is the correct strategy to optimize the growth of my portfolio within the time I have available to trade within the context of a full-time job.