Yearly + 1 month Recap of Live Trading

[Mike B 625]

I thought I would take after Rob C. and do a 13 month of trading anniversary recap about my trading journey. In this recap I am including the biggest lessons I learned, what I wish I had done differently before going live, and last but not least my recommendations for new traders, at the end I also added a comparison of November 2018 to November 2019. Hopefully, this help you not make the same mistakes I made, or help you prepare to go live. I figure, it will be best to start with recommendations for new traders, so here I go.

Recommendations for New Traders

1. Develop a business plan that has a vision, an overview, a trade plan (Robert H. Template is great), objectives, and an action plan with monthly, quarterly, and yearly goals. If you would like an example, send me an email and I will send you a copy of the one that I use.

2. Trade every type of strategy until you find what you are good at, and then refine it and come up with a playbook before going live. There is a link in my daily journal on page 13 if you would like an example to build off of.

3. Develop a risk management plan, and then seek someone out that has been trading live to give you constructive advice on it. Take that advice and apply it as you see fit, and remember they probably have some past experience that the advice is built on.

4. Number one in my book is “Respect your Stop.” You are going to be wrong, have hotkey mistakes, and make bad trades. One of my criteria’s for going live was to go 20 straight trading days without violating my stop, because if I could not respect my stop in Sim, then how could I think I would be able to respect it when I was live. I believe this is the reason I have been able to not let a stock go past my stop this year.

5. Last but not least, and I am sure you heard it from a lot of traders, it is a process that will take time, so enjoy the journey as you develop yourself as trader and truly get to know what makes you tick. I know I have.

Recap of the last year

Personal – The one thing I was not expecting once I began my live journey was how much I would learn about who I was. Andrew and all the other moderators talk about how important psychology is in trading. It is not just the psychology while trading, but also getting to know yourself and understanding why you react the way you do in different situations.

It took me a couple of months, but I eventually figured out that I hate to be wrong, because in my profession being wrong can have catastrophic consequences. That is why for the last 23 years I have strived for perfection in everything I do at my job. Now introduce a profession where successful traders are wrong 40% of time and you can see I have a lot to learn. Trading live for the last year has made me a more flexible individual, and is helping me to become a better overall person.

Technical – My biggest fear once going live was that I would blow up my account and not be able to continue before I could get through the learning curve; therefore, I decided to take Andrew’s advice and treat this like a business. Prior to going live, I developed a 5-year business plan, and a career plan, trading plan, and metrics to achieve over a year.

If any of you kept up with my journal, you saw that I approached the last year through baby steps. I would attempt to master one topic first, then move onto the next. Below was the path I took:

                Step 1: Risk Management Plan – Failed at this until July 2019.

                Step 2: Stop Loss Plan – Mastered it in Sim, I say this because I made it a whole year without violating my stop loss (full disclosure: 1 time I couldn’t get out a trade due to platform issues, but I did hit the button to exit).

                Step 3: Entry Plan – This took me a while to nail down on my Orb strategies but by May I was very happy with it. When I introduced an afternoon strategy it became a huge problem and my equity took a hit, because my entry plan did not work, 25% accuracy when I took it live. Thanks to my risk management plan I was able to survive with minimal losses and have been able to readjust the entry to acceptable win rate of 61%.

                Step 4: Profit taking – By far this has been the most difficult thing for me to deal with. I refer you back to I hate being wrong. I would be quick to take profits, so I could be right, but then would miss the larger move. If I held on longer; however, meant I would get stopped out more, resulting in the dreaded being wrong situation. I am still working on this but having a solid risk management plan has made it much easier to deal with.

Monetary – Well, I know I am not the next great trader, nor have I ever thought I would be. I am perfectly happy being the 3^rd string quarterback making minimum wage, so over the last year this has not been much of a focus for me yet. The only monetary thing I really wanted out of this year was not to blow my account up. In the end I accomplished that, so after I get a profit taking plan that works with how I trade, I will look at increasing risk. I know it is crazy trading stocks not to make money, but to develop my trading skills, I think I read that somewhere once. 😊

Biggest Lessons learned

1. I hate to be wrong

2. Thinking in probabilities is a must, and I needed a lot of work in that area.

3. I am really good at executing my stop loss

4. I have sufficient discipline to execute a solid trading plan.

5. My risk management plan I developed in sim was crap and caused me to lose more money than I needed to.

                1^st Risk Management Plan:

November 2018 December 2018 - Took same share size per trade with no consideration for equity amount

January 2019 – July 2019 – was risking 3% of my equity per day to make 1% of my equity, yeah makes no sense, right?

                2^nd Risk Management Plan: I now risk 1% of my equity per day to make 2% of my equity.

6. The more I focus on money the worse I trade.

7. Having a business plan prior to going live gave me a road map to follow when things did not go the way I expected.

What I wish I had done before going live

There is only one thing I wish I had done before going live.

I wish I would have had my risk management plan focused around max loss per day instead of focused around what I needed to risk in order to make X dollars. This was a huge miscalculation on my part and I didn’t figure it out until 9 months into trading, when I started to focus on profit taking and why I couldn’t get my winners to outweigh my losers. Once I realigned my risk management into a correct ratio, I started having bigger winners and smaller losers and my net equity curve finally started to move up.

Comparison of November 2018 vs 2019

Item	2018	2019
Total Days Traded	15	12
Total Trades	28	9
Average Trades per day	1.86	.75
Profit/Loss %	(2.6%)	1.2%
Rule Violations Average per day	3.5	.6
Trades outside Edge	5	1

Net Equity Curve November 2018

Net Equity Curve November 2019

 

I can't wait to see what the next year of trading brings.

Best wishes and safe trading to all.

[Rob C 826]

Mike its awesome to see your trades/day < 1.0. that's amazing discipline.

Great recap.  Trade safe in 2020!!

[Mike B 625]

8 hours ago, Rob C said:

Mike its awesome to see your trades/day < 1.0. that's amazing discipline.

Great recap.  Trade safe in 2020!!

A little bit of that is also due to just not being able to trade in the afternoon this month. It is way better than the over trading I was doing last November. 

[Carlos M. 232]

Mike this is amazing track of progress. 

Very interesting how you are trading less and being more profitable. Just shows from a high level you are selecting more quality setups due to your experience over time. 

Looking forward to see how this curve will look in 2020!! 

[Brendon 146]

Getting out of the way with a small loss has been the hardest part of my journey, but I have been punished well, learned, and witnessed Andrew himself taking sometimes 2-3 attempts before getting the correct setup. And just in case you think you can sneak in a swing trade (thinking it will recoil back the next day), I have IB wind up my acct. at 3:59 PM. Helps if you break your rules 😄. Stick to your plan, you can be wrong 2/3 times if you let your winners get that multi R:R, then at the end of the day you can crack open an ice cold one with the wife. 

Edited December 3, 2019 by Brendon

[Erwann 13]

On 12/2/2019 at 6:32 AM, Mike B said:

1. Develop a business plan that has a vision, an overview, a trade plan (Robert H. Template is great), objectives, and an action plan with monthly, quarterly, and yearly goals. If you would like an example, send me an email and I will send you a copy of the one that I use.

Thank you so much Mike B for sharing. It's really great to read your feeback and learn from it.

If you still agree to send it i'd like to read your business plan. Is it possible please ?