Sunday, March 11, 2012

Checkpoint: Review of 25 trades

Time Period:  March 1 to March 9

Total gross profits/per contract*:  $987.50  +19.75 ES points 
Total trades:  25
Accuracy:  60.0% if scratch=losses   [68.2% if scratch excluded; 72% if scratch=wins]
Execution score: 86%
Opportunity cost: $-62.50  -1.25 ES [execution errors have been net-favorable]

I lost my focus, I went astray, I was wandering somewhat aimlessly.  Gambler Grove started to come around, with influential whispers of "Hey, going for just +2.00 targets is a drag, man. Go for the big runners!  Feel that +10.00 trade!!"  And when I was weak, Mr. Revenge came for a visit.

Luckily, I've met some great people on my trading journey, and they helped me to get back on track.  I made a commitment on March 1st to take 20 trades and be consistent and disciplined to my trading plan, using +2.00 as the profit target and going for singles (forget about swinging for home runs).

This past Friday ended with 25 trades since the beginning of the month, so I've decided to base my evaluation on a slightly bigger sample of trades.  Overall, not a bad execution score, which led to a respectable P&L, especially given the market conditions this week -- which wasn't the most favorable based on my methodology and time frame.  The execution score started to slip slightly on Wednesday and got worse up through Friday.

Report from Tradervue: March 1 - 9th results
Breakdown of trades
Wins = 15  (12 full +2.00 ES target wins = 48%) * 
Scratches = 3
Losses = 7  (3 full stops = 12%)

Max drawdown = $-225.00  -4.50 ES
* Note: There were 3 trades, all +2.00 winners, that were taken simultaneously in 2 separate accounts, and the total profits for all accounts are included in the results.  However, they were still counted as one trade.
Execution Score
The letdown in my execution score over the past few trading days concerns me, especially since that's the metric of most significance: Am I following the plan, or not?

Could the execution score slippage be a sign of mental fatigue?  Getting temporarily worn down by the market conditions?  Or something else?  Not sure, I'm still evaluating.

On the bright side, I have deliberately passed on many setups over the recent days, to my benefit.  And as I have noted before, my current execution score and opportunity cost metrics do not penalize me for missing or passing up trades. For now, I'm fine with that.

Risk per trade
This is one metric I hold very sacred, my risk per trade.  My current risk per trade is currently around 1% of my portfolio, which equates to about $10k per ES contract.  But if my performance continues to support a relatively stable P&L curve/drawdown, I may start to explore the opportunity of adding additional contracts, assuming my overall risk per trade is <= 1.50 or maybe up to 2% of my portfolio. 

In the future
An objective I've kept in mind is to utilize a trading method that can scale up to 20 to 50+ ES contracts per trade.  I believe this current trading methodology, based on a variation recommended by Renato for his Diamond Setups method, and further refined with other DS members, has created a solid foundation that (in my opinion) can achieve that objective.

But what now?
I believe the best course of action is to continue trading on the current trading plan, based upon this exercise of evaluating a group of trades.  Take one good trade at a time, for 20 more trades, and reevaluate.  And then perhaps 20 more after that.  And so on.  I want to see how well the current trading plan works, under various market conditions.

Ultimately, my goal is to steadily build up the discipline to execute per my trading plan (whatever it is at the time) and burn it into a long term habit.


KIS said...
This comment has been removed by the author.
KIS said...

Hi Grove,

Good job on the last 25 trades! Really like the analysis breakdown of your trading. Keep it up!

Grove Under said...


Thank you for the comment, very much appreciated!