A Year in Trading

Man, trading is hard. I honestly did not expect it to be as hard. I consider myself to be a very rational person. I try to think of the logic behind things and once I get them, I learn quickly. I expected this endeavor to be the same, but it was not the case. Trading brings out one's worst impulses, it is no joke.

I studied finance in college and worked at Morgan Stanley as a research assistant to a broker for almost three years so I had some exposure to capital markets. I knew from the start that I wanted to be a trader, not a broker. With my interests in math and computer science, I began studying to do a degree in Mathematical Finance, thinking that'd be the easiest way to break into the field. It had never occurred to me to do it on my own. Anyway, at the end of 2016 I decided it was now or never to try it on my own while I worked as I had scratched my plans of getting a degree (did not want to go into debt for over 100,000 dollars). 

I started learning from Michael Huddleston and his online stuff. Some people might be put off by this already, but this is an update on my progress on a year trading live, not on comparing the people I've learned from. I learned from other people as well who are going to be mentioned later on. His concepts appealed to me because he touched on some aspects that I felt I identified with. Namely, the attitude of don't take things for granted, the game tends to be stacked against smaller players, go against the flow, be yourself, etc. Also, he's been there whenever I've needed him via phone, via e-mail, Twitter, etc. He has a lot of material and it's very demanding. I work full-time as a Software Developer and play semi-professional football (pretty much the same schedule as a pro player but without the glamour and only a few bucks, so basically, taking it professionally but having to work too). Coupled with that, I live with my girlfriend and I have an active social life. The time to study trading properly was hard to come by and I was not very well organized. Even though these set backs, I was studying daily even if for just thirty minutes, and from January to April of 2017 I traded a demo account that I was profitable on. I was ready to go live.

Or so I thought. March 31st I took my first trade overnight with my $1,000 account and it was a 1.5% winner (1R). I was so happy, I could not believe it. I took another the following night and I made another 1.5%. I felt great, this was awesome and I was already up 3% in my first two days of trading. I would surely make 100% this year, plus adding more money to the account I'd probably have $5,000 in a year. I took a loss for 1% and made it back later that same day. Then it all went downhill after that. I was constantly talking to my girlfriend about trading as she saw me on the computer for a few hours each day, and she started asking me how my 'gambling' was going. I took offense to the term gambling and inadvertently started putting extra pressure on myself by sharing the results. A 1% loss was followed by a 0.5% loss. I went winner, loser, winner, loser, winner, loser and trading began to take a toll on me.

It was now June and I was juggling football season with travel, work, a trip for work, trading, my relationship, visiting my family, hanging out with friends, it was very exhausting. I started to get heartburn every day, and I would get up in the middle of the night, even with no alarm, to check on my trades. Because I had to work during New York, and because I did not want to hold through trades while awake, I was doing all my trades as limit orders during London. This approach had worked on demo, but I could sleep through the night. Once funds were live, that all changed. I'd get up many times and check my phone. Half asleep, sometimes I closed trades that were 10 pips against me that would've turned into winners, or I'd exit out of a position if my winnings had retraced even a bit, instead of holding for my winnings. By the end of June, I was just copying what people were trading online. Fortunately, I had made the session to trade one micro lot until I got my act together. 

The account kept trading between +1% - +2% during July/August. The only problem was that I was taking a good trade, then getting excited and getting a bad one because I did not have a specific plan, was just taking 50/50 trades and hoping they'd be good. I was trading off my phone on work trips or football trips, it was a mess. My girlfriend kept asking me and it was painful to tell her I was stuck. I couldn't understand why I wasn't making any progress.

At this point, I saw Will Hunting was going to be in Miami and I invited him for dinner to chat. We talked for a few hours and he gave me the greatest piece of advice I've received. He asked me what my expectations were (I said 6% return a month, for 100% a year) and I assured him that I was committed to that, that I did not have unreasonable expectations. He looked at me like I was in denial and said to me "You say that, but your behavior tells me otherwise." See, to Will, what I was saying did not line up with what I was doing and I couldn't see it. If I was looking for 1-3R trades, risking 1-2% per trade, just 2-3 trades per month would be more than enough to get my results. Why was I taking 12 trades in a month? Why was I taking 3-4 the same day, and in different pairs? 

Other things we talked about covered things such as not trading from a phone screen, no trading while traveling, and he closed it by telling me to do the analysis as a hobby and to ask myself whether I could really trade for a living. I've mostly been an underdog all my life so I took that as a challenge.
Of course, sometimes we don't exactly pay attention to the great advice we receive and we learn best by making mistakes. Two nights after having dinner with Will, I took a trade while on a business trip from my laptop. It was certainly a loser and took me down to 0.5% gains in the six months since I had opened the account. This was the beginning of October of 2017. I was so disappointed in myself that I stopped trading altogether until January of 2018. I needed to get my head right.

To me, my initial equity line of $1,000 was very important to maintain, I did not want to go below it. While practicing for three months, I realized I was just taking random trades on demo sometimes to see what would happen. I needed to go live to take it seriously. Demo trading was too boring for me. I was going to keep trading one micro lot. I took a winner, then got excited and got a loser the following day. Then, the following week I had a plan and was afraid to act on it on Tuesday and it panned out as I had outlined. Then on Friday, right before I left for a friendly game, I took a trade just because the week was going to end and I had not done anything. This was one of the deadly sins that Tom Dante always mentioned. My account was back at $1,000.12 and a losing trade would take me before my opening balance which was important for me to avoid.

This was the lowest point of my trading 'career' so far and I was very depressed. I stopped telling my girlfriend about trading, and got more organized. I decided to try out New York trading as London was obviously not working and had a negative impact on my health. I took a winner in February, then got excited and a loss the following day. I was screwing up still on the issue of wrong expectations. I took a winner at the end of march to bring my account to $1,002.59 at year's completion. 

FINDINGS

Live trading and demo trading are completely different endeavors, and one doesn't know what he's doing until he puts money into it. Trading brings out one's worst feelings: greed, fear, exuberance. It affects your head, your health. But it's also certainly doable for a very few select people who can get over their mental hurdles.

I still haven't gotten there, but at least I've calmed my anxiety and I'm not crazy worried about missing chart days or checking the market. Heartburn has disappeared now that I'm following the New York session. I've become more organized with my daily routine and my I've identified a plan that I believe goes well with my lifestyle and my personality.

I am convinced I'm going to be a successful trader, and I've even had offers to manage money without a track record, just by speaking to people. I am no salesman, and I've just had conversations about what I think or what I know about the market, and I've had people ask me to manage their money. I obviously turn everyone down as I don't think I'm nowhere ready to handle that amount of pressure and I am clearly not a consistent trader, but I find it amazing how much money there is available. Getting an offer in prop or getting millions of seed money might not be reasonable without a great track record, but getting a few hundred thousand dollars of capital to start out with is very easy.

I'm taking my second year to try and take a good trade per week, and if it's not there, it's just not there. I want to bring up my equity because to me, moving ahead of my $1,000 starting equity has some mental effect that I obviously have to get over, but to me, that extra money would be the market's money and would be easier, or so I believe. I am convinced I have the skill set to build up an account, all my struggles have been mental issues.

Fortunately, I've been disciplined in one respect: risk management. I went down to the smallest size possible once I realized I wasn't doing well. Here are some numbers to go with this year in trading.

THE NUMBERS

I took exactly 60 trades. This averages to about one per week, but that's not accurate. I took 15 from September to March, I took 45 from April to July, or about 12 per month. My winning percentage is 45%, but that's a bit skewed because there's a few scratches there so more like 40%. That I'm still ahead even by 0.2% with these numbers is incredible. I should've lost money. Risk management has been key and those two winners really helped here. 

Focusing on Euro and Cable only seems to be the way to go. Aussie and Kiwi were net losers. Cad was a net winner but I'd rather not worry about it. I want to focus (and have been these past two months) on just two pairs for now. When I'm doing better and have more time, I can maybe look to expand on the pairs I follow.

CONCLUSION

I think I've learned a lot and I read the market better. Trading and analyzing a market are completely different things however, and that's where I need to improve. Too many times I'm afraid to take a trade when it's moving against my intended direction, and then end up taking it at a worse price/time.
I look forward to doing this a year from now and I know my results will be much better then.
I also want to thank the people I talk to regularly, especially Will for accepting my invitation that night in Miami and keeping in touch via Skype.

 Thanks for reading.

Long GBPUSD -15pips

I keep doing it! I keep getting greedy, wanting to get back to winning and keep trading dumb trades.
Even though I believe the set up was defensible, I don't think I was exactly prepared to take it, as it is not my set up exactly. 

It's very frustrating calling the levels right but not being able to trade them. The problem is not with this set up exactly though, it's more with the execution. I had a winning trade and increased position size as I had a winner and now I'm back to square one. I'm trying to get all back in 2-3 trades and my head keeps betraying me.

I am not learning my lessons unfortunately, and it's very frustrating. I said I wouldn't trade every day, that I'd wait for my set ups, that I like to trade Tue-Thur, and keep blowing it.

Here's the set up, looking for GBP to expand higher, with USDX confirming it was going lower.

Various Trades

Trading demo is definitely very different from trading live funds, that's for sure. Trading live funds, even at such small blips as I am currently trading, will do crazy things to you. I've been awfully off my game, albeit the difficult markets. I have been exiting out of positions early, taking trades early because I'm greedy, freaking out and closing without touching my stop loss and then see the move pan out. I am not moving my stop to break even soon enough. Basically, I am not following my trading rules.

For the past week, I should have been positive, or at least neutral, instead of down -0.35% as I am for this week and -0.7% for the month. I am overtrading, changing my mind, doing crazy things. I need to settle back to my routine and let that pan out.

I thought NZD would go down to 0.6780 and tried a swing trade, even though I like trading short. I exited out early, then retook the trade, even though I was not close to my stop yet. After that, I trailed my stop too close and never re entered the trade, then it dropped over 100 pips.

I exited out of a Euro trade early, then it moved just fine in my direction. I did not close my Cad long trade when I was up 58 pips looking for 60, even though we'd just taken out a high, and many more.

I took two positions at the same time, even though my  mantra is not to do more than one, as I am either long or short dollar.

I have to keep trading with the smallest size until I am back to my original level. I never expected to have such a losing streak, with 8 of the last 10 trades pretty much losers. This portion of my trading needs to be about learning and growing my account little by little. Eventually it'll grow and I'll be doing well, but I don't need to rush these things. My 3% weekly goal is attainable and just fine, no shame in that. I need to go back to that, even though with current trading size I'll be looking for something like 0.5% return per week for the foreseeable future.

I took 6-7 trades this week, while away from my computer, going off my phone, way too many bad things. Really disappointing to be in this funk. Hopefully I'll learn from this, at least I'm getting a bit better from what I was doing last week but still, not in my A game.

Short EURUSD -30pips

I once again let somebody influence my trading and it cost me. I moved to 2 micro lots after making that 0.3% back, and looked to short Euro thinking it'd go lower with a stronger dollar closing their respective gaps. 

I was up 20 pips and thought about moving my stop to break even. I had in my head somebody telling me 'it should be okay to run with no problem from here' so I was afraid I'd miss on the move.

I saw the news at 3am and even thought it looked suspicious but went to sleep as not much happened. When I woke up I was down some 20 pips and was hoping it'd continue lower after a retracement.

I was wrong and it moved higher some 100 pips for the day, netting me a loss of 30 pips.

I'm back to 1% gain for the year, which is still better than losing money and the markets have not been all that great, but I need to go back to my bread and butter trading which was working just fine for me and was yielding the results I wanted.

My stop here was way too high for what I like trading, even though the set up still looks good to me, sometimes things can be unexpected.

But I need to more to break even and preserve capital when I want to, and I need to take profits when I feel comfortable too also.

Despite all the set backs, I feel like I'm learning a lot and can see a lot more set ups forming. I'm leaning towards my day trading plus some scalps throughout the day as well if I see something that I really like or something that's tradeable, although I don't want to go crazy with trading all the time.

I also need to be better with my journaling my trade right away, and updating the information afterwards.

Short NZDUSD +20pips

I was watching the news event live at 6:45pm for NZD, thinking it'd want to trade higher to close 0.6980. I was hoping to catch a retracement to go long. Price never retraced and shot up to 0.6970 but began to stall. I figured it'd trade lower from here so I took a short at 0.6966 looking for 40 pips.

I did not like the price action so I cut bait at 0.6946 for 20 pips. I've been pretty desperate for a good win, so I should've moved my stop to break even or +5 or something and then let it run. 

I'm trading with the smallest size as my trading has been sloppy and I need to make back my returns.

I'm currently at 1.6%+ for the year, which is less than stellar. I closed April (first month) at 1.3% gain.

EURUSD +11pips

When I was trading demo I did not let other's opinions influence me, and at first, I started with my real trading the same way, but as soon as I took one loss, I was a deer in the headlights. I've been super sloppy, getting in and out of positions without sound analysis, not trusting what I'd been doing prior, etc.

If I'm day trading, I can just go for 1:1 risk/reward scenarios as I was doing, or even the 1/1.5 that I had gotten comfortable with, usually in the form of 20 pip stop loss, 30 pip objective. I closed this trade too soon instead of moving stop to break even and just seeing what it could do. I could've gotten the 30 pips back from the losing EURUSD trade.

Alas, I was influenced by somebody else's idea of the trade and closed it.

EURUSD -35pips

Been trading with the smallest of sizes as my trading has been sloppy, I've been overtrading and I don't have the experience to be doing this in this market environment.

I've also been sloppier about my journaling. I was just plain wrong about the direction of this trade and it cost me.

I'm finding out that when I'm wrong about a trade, I just get the full stop because it's going in the opposite direction, then because I have a tight stop, I can probably play with smaller stops than 35 pips, need to know to trust my levels, and if I'm wrong, just be wrong quickly.