Who’s doing best in these markets? Definitely the discretionary traders!
Well that is an exceedingly easy question to answer! Experience is showing it’s value with the ex-institutional traders showing (in general) quite exceptional returns over the last 8 weeks. After adjusting for leverage, we are seeing the following average results:
- Discretionary ex-institutional traders: Average unleveraged returns of 5.6% pm over the last 2 months. We have seen no traders reporting losses in this period and best unleveraged returns of 27% for the last 8 weeks. These traders LOVE volatility.
- Systematic ex-institutional traders: Pretty flat across the board, but what we have noticed is that most of these would seem to have some discretionary input as they turned off their models and exited the market once conditions reached extreme levels.
- Systematic retail traders: APPALLING. All those with variations on the Martingale approach got obliterated. Most blew their accounts up and showed an unwillingness to change their risk-levels and strategic approach in the face of changing market conditions.
- Discretionary retail traders: Mixed. A few quite extraordinary results (on leveraged accounts) and of course it’s hard to know whether that was good luck or good trading. Overall the discretionary traders have worked out better than the systematic as they managed to change their approach when required. Over-leverage still the retail traders biggest enemy.