Wednesday, January 31, 2007

Review of January

This January marks the first month that I have been able to keep stats of my trading for a whole month (see System tab for the stats page).

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Where shall I begin? First is the format of these stats. These stats don't tell me certain information that I want to know. I will add some extra columns for next month's trading stats so that it will be more informative. I'm not sure how to record the average win and average loss in an easy and convenient manner for all of the different markets that I trade, so I will chew on that one for the next few weeks.

According to the stats, I made around 20 options trades, 21 US equity trades, and 31 Canadian equity trades, and 14 Futures trades. Sounds like quite the busy month, but there is no context to provide some meaning to this statistic. How many trades is too many for a trader with my kind of style and multi-market approach? I'm not absolutely certain of the answer, so I think I'll start with the highest numbers as a yardstick -

  • 8 options transactions in one day,
  • 9 Canadian stock transactions, and
  • 9 US equity transactions.
Let's see what happens in the coming months.

The next re-assuring statistic is that I made $3641 this month. Whoo-Hoo! It feels gratifying, comforting, and stupendously divine to know that I can make money doing this! That is the great news. Pat, pat.

The bad news is that I've made 9 mistakes this month, which is way more than the average. What's really telling is that these mistakes cost me $1756. Those are some very painful and costly mistakes. Usually I sell too soon and leave a lot of profit on the table when the stock runs up after I sell. In the GS option mistake, I waited too long and sold too late. I think what is happening is that there is still a lot of hope lingering around which causes me to make these mistakes. Some days I am mentally focused and resolve to sell according to my trading plan. On other days, everything is a grey area and I think everything should be given a bit of flexibility to move. Even so, there's just no excuse for leaving almost $1/contract of profits on the table. I may as well start using $100 bills to start a fire. It's frustrating to even think about it, so I'll just stop now - no need to build up excess negative energy inside of me.

The other thing is that I've stopped trading the Futures market. My style and approach to trading Futures required me to be in tune with the market, much like how a dance partner knows the other partner's idiosyncrasies, behaviours, and patterns. It worked for a while, but it was required all my attention (ie. I couldn't trade or watch other charts while I was trading ER2), and was hard to keep up the mental focus. In fact I remembered being quite drained at the end of the day. Until I can figure out how to trade the futures while I trade the other markets, or until I find someone who is willing to teach me how to trade futures and other markets at the same time, I will stay away from futures.

That's about it for now. My advice to myself is pretty simple. Start making less mistakes.


Tyro said...

Congrats on the profitable month. Has this changed anything on the quest for another full time job?

Phileo said...

Hi Tyro,

The answer to that question deserves a post of its own. Stay tuned.....

Caravaggio said...

Phileo, congratulations on the profits for the month. Your comment on trading the futures requiring being 'in tune with the market, much like how a dance partner knows the other partner's idiosyncrasies', resonates with a trading experiment I tried just over a week ago when I was trading purely based on price alone (no indicators of any sort). It's funny how the rhythm of a market can sometimes match up with how a trader is feeling, creating a kind of 'in the zone' feeling. It was profitable but I have also stopped this type of trading, because I wasn't sure I would know what to do when the music changed.

PS - I'm also on the knife edge between putting an end to the trading and getting a 'real' job. Hope it all works out.

Phileo said...

Hi Caravaggio,

Yes, I read your post about the trading experiment that you did. Trading the futures market was a bit of my own experiment as well. It brings out a whole bunch of things (both good and bad) that I need to learn about. In due time......

In regards to trading for a Living vs. working a day job, I can't really say what's best for you. But hopefully, I've laid out the issues which will help you to decide one way or the other.