How Have Our Trades Performed So Far In 2020?

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I always get a bit nervous when I get asked what the performance of our trades have been. There’s more that goes into generating positive returns than just the trade idea. For one, the money management around trades is crucial. Nevertheless, I do keep a track of all the trades we have put out this year. There have been 26 in total, spanning FX, rates, equities, commodities and credit. Seven are currently live (Table 1), while we have exited the rest (Table 2).

The punchline is that most our trades made a profit – our hit rate is 65% with an average return of around 2.5% per trade. The cumulative return of the trades annualises at 14% with a Sharpe ratio of 1.9. These numbers are very good, so I’d take them with a pinch of salt. There’s a big difference between paper trading and real-world trading. The true returns are likely to be half those numbers.

In terms of specifics, our best trades have been short BRL, ZAR during the COVID crisis, and long gold more recently. On the negative side, our worst trades have been short credit, short Italy (both during the crisis) and short ZAR over the summer.

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)