Tuesday, March 5, 2013

My 2013 New Year's Trading Resolutions

Wow, time flies, has it really been that long since I last posted?  Well, now that it's March, most people have long forgotten about their New Year's Resolutions.  So it's time for me to zig while most zag -- better late than never.

  1. Stop overtrading/revenge trading/daytrading
  2. Lower expectations of returns and trade small to help build solid trading habits
  3. Explore and implement other trading methods, products, and time horizons
  4. Start thinking of returns based on % risk (R), not $'s

    • Overtrading/revenge trading to account for < 5% of total trades
      • Too much intraday trading can emotionally charge my trading in a very negative way
      • Even reducing my historical revenge/rouge trades (30% during my worst periods) by half would have a huge positive impact on my P&L
    • Target consistent 2-8% returns a month
      • Focus on limiting risk (not maximize returns) while building up good trading habits
    • Initiate equity swing program, options writing, and further explore forex strategies
      • Swing trading via newsletters/chat rooms/autotrading (target 50%+/year)
      • Options writing via newsletters/autotrading (target 25%+/year)
      • Forex strategies via alternative trading methods (target 100%+/year)
    • Evaluate performance based on R multiples.  Reports and analysis are based primarily on %'s

    • Stop daytrading
      • Suspended my futures accounts
      • Reduced equity/options accounts to significantly below < $25k to put PDT into play
      • However, allow forex account for "penny slots" daytrading -- minimal absolute dollar risk
    • Reduce % risk of portfolio per trade
      • Average risk per trade <= 1% of portfolio
      • Lotto plays <= .5%   (weekly options plays)
      • Stronger conviction (rare) <= 2%
    • Capture stop size as a metric to calculate returns based on R. Reports and analysis should focus on %, not $'s
    • Implement autotrading initiative to explore other trading opportunities
      • Research and initiate autotrading of equity swing trading newsletter(s)
      • Research and initiate autotrading of credit spread options newsletters(s)
      • Analyze and explore other forex trading strategies in increase # of trades and returns


    More details later, but based on implementing a large portion of the tactics above, I have been NET PROFITABLE both in my equities and forex accounts the past 3 months.

    One of the biggest factors has been to SLOW DOWN.  Daytrading was fine when I started with profitable trades, but a few losing trades in a row often had the tendency to quickly snowball into revenge trading.  I'll eventually daytrade again, but not now.

    Based on the past several months, I'm cautiously optimistic and looking to focus on even greater consistency with my overall trading process as I complete 2 years of full time trading.


    Trin Café said...

    Welcome back. My favorite resolution that I also share with you is focusing on % and not the $'s. More attention on managing risk and not focusing on the greed/profits.

    - Trin

    Grove Under said...

    Hi Trin,
    Big apologies for missing and replying so late to your comment. But I totally agree with you regarding risk. Hope all is going well!


    jojo said...

    Thank you for your blog! It needs a far larger readership than is indicated by the lack of comments.
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