October Monthly Review

 Without a doubt, my focus needs to be on compliance. I look back at all my stats, every poor week is low compliance. Every good week is high compliance. Especially with market conditions like these, I need more reasons to avoid trades rather than take them. 

I have been slipping a lot lately, and recently seem to have figured myself out and my trading, to have a solid foundation to trade upon.

I call it the big 3.

Selection.

Risk. 

Management.

The problem, is how can I stay compliant in all these areas? These are my big 3 because they have been the source of my trading issues and reasons I lose the most money. These are where I make the majority of my trading errors. 

My problem with selection was taking lesser trades. What makes them lesser? I had to look back at my wins and compare what was in common. I came down to laziness. Not caring what I was trading. Trading for the sake of action. 

It was real bad because I would sit there and clearly know that I shouldnt be taking it, and should be ok with letting it go, but would do it anyways. And thats where the next issue came in.

Risk. Trading is far from a black and white activity. Some trades are good. Some are bad. Some are worth taking a lot of risk. Some a little less. Some clearly not A+ but still worth scalping some money. Some not worth a second of my time. Where do I draw the line?

Well there is no line. BUT, you HAVE to have some kind of line in place for your trading. Why? Risk management. Long term. Process over outcome. Over the course of hundreds of trades, if my risk is not consistent dependent upon what kind of trade I am taking, I am going to have mixed inconsistent results.  Is it a hold or a scalp? Does it match every point on your checklist or only a few? What does that mean for your risk?

And these two issues come before the trade even happens. Then management. 

I would kill my potential p/l by NOT getting out of the damn loss. Part of it came from lack on a good process around how to manage each add. Knowing if its a scalp or a hold. More holes in my process. Whats the best way to manage my trades? Had to look at stats and review. Answers were clear and have been clear for the longest time. My issue was trading like I knew what my data told me. 

I spent a lot of time these last few years spinning in circles trying to play this black and white game and its killing me in these rough patches. I keep stepping on my own toes trading too small on the big wins, and too large on the dumb losses. Its a lot of questions to consider, but for me they are clearly questions that need answers.

Im happy to say that now I have a plan for it all. Not that I didnt before, but it wasnt enough. I thought there would be areas I could avoid and not concern myself with but I was wrong. Mainly focused on risk. I would try to use the same risk on every entry regardless of scalp, reversal, of big picture. So when I lose 6 reversals in a row and down my MaxD loss in less than 15minutes, or worse, to start the day. Mental capital used up and on tilt. Led to a lot of bad habits. Its a snowball effect.  

To put it in a word, its discipline. It doesnt take a genius to figure out you should only trade the best looking setups. Or to vary your risk dependent how good the setup is. Or to trade to make money and limit your losses. 

A couple quotes come to mind. Chat with Traders guest John Rambo was a pretty loose kinda interview. Would make jokes throughout the show and seemed light hearted overall. But the one thing he said that he got serious on, was 'If you are a Zen Buddhist, you would be a great trader.' Straight faced, stone cold. It was a live interview so there was an audience, and they were cracking up at it. But it was one of the few times the whole show that he was serious about it. And I feel it. Ive had all these things in front of me, to help me a be a better trader. But rules arent enough. At some point you have to perform. Not having a plan, or not following your plan leads to emotions coming into your trades. 

The other was Bellas 'Do you want to be right, or do you want to make money?" Ive found a balance of both in my trading. It is by starting with, and keeping, a core position. And adding to them, and removing the adds when they are not working. On top of all of that though, is using proper risk. 

I make most of my money through my big picture ideas. Therefore scalps and reversals do not, and cannot have the same amount of risk per entry. One big picture win, should eliminate several losses, possibly days worth of losses. Just one good one. So if I end up risking the same amount of a scalp, as I do a big picture idea, im spinning my wheels and suddenly one good win on a big picture idea, only covers 1 or two losses. 

I have sized down, and reduced expectations in my scalps and reversals. Taking the quick pop and calling it. Theres no need for me to sit in a lesser odds trade, that isnt working when I know my best wins go and never come back. And lately things have been coming back, a lot more often. So im not messing with it. I think these trades have a good shot at a quick move, and thats it. I take it and run. Not where the majority of my money is made. Simply wallet padders. Doesnt deserve more thought than that. 

I have a spot I keep track of 'If trade was profitable just after exit.' If that spot starts seeing more checks in it than not, then ill start trying to hold longer on the scalps/reversals, but until then, I will take the quick $.

One things I have done much better with this month, is reduce trades taken that I shouldnt take. Only 16 trades out of 372 this month I marked 'settled for less.'

NUMBERS

-$3070

141 / 372 38%

77% Compliance

-30R

88 Full -1R loss, 61 more than -1R loss.

Avg Win +$35 Risk $35

Avg Loss -$35 Risk $42

Avg Risk $39

So if my average risk is $39 and I lost 30R, that means I should only be down $1170 on the month if that risk was consistent. So what happened. This is also another reason I need to have separate spreadsheets for big picture ideas and scalps/reversals. Doing some more digging. 

Scalps

Avg risk $32

Avg win $32 risk $28

Avg loss $35 risk $35

Reversals 

Avg risk $38

Avg win $29 risk $38

Avg loss $28 risk $41

1st/Range/Core

Avg risk $47

Avg win $39 risk $41

Avg loss $44 risk $51

Offsides in every case still. Every trade I take Needs a defined risk point and size based off of it. I wont be able to be perfect every single time, but it has to be better. 

Its so hard to have a clear picture of my data because of low compliance. The flat out answer is to be trading smaller and use correct risk. When I look at these numbers, see im inverted, knowing my biggest mistake is not using correct size, and added with a 77% compliance. Theres not much more to look into these numbers. Fix compliance. Use correct risk. Stop out when supposed to. 

It isnt that the avg risk should be bigger on wins than losers. Its that it should be equal. I dont know if the trades going to be a win or loss before hand, therefore risk should reflect it. I have to be consistent in my risk. 

Just looking at my trades, I have the usual problem again. Big R winners, but the size so small to not make a big difference. 

Had a -7.5R day and lost $426

Had a $329 day and made 19R :(

      -A 14R trade only made me $181

Had a day where I started down -$817 with -13R

     -Came back made 15R, but only $444

Had a -16.6R day and lost $915. With an avg risk that day of $57 per trade. 

Best trade of the month was a WMT trade. Lost on it at first -2.4R -$133. So avg risk of $52 an entry

      -Made it back with a 16.5R and +$647

I mean I can really keep going but its the same story every case. I start off too big, lose big, catch it again later, but now trading much smaller. Consistency is key. 

PROBLEMS

-Not cutting losses fast enough.

     -Of all the trades I took this month, 10% of them I exited to slow. That added up to A MINIMUM of $1000 that I could have saved by exiting my losses faster. In total these 38 losers cost me $2126, Which made up more than 2/3 of my losses this month. Just 10% of my trades were the cause of 66% of my losses. 

     -And it isnt just cutting them alone. It was also sizing up and risking too much on them. 

-Inconsistent risk.

     -Just about everywhere. From scalps to big picture, risk would be inverted in winners and losers. Scalps would be too big of losses, and big picture wins to small. 

-Not walking away

     -I had a few days where I was up a good chunk, then gave it all back and ended with a big red day. In others I would start off huge red, but keep going anyways. I have convinced myself for the longest time that my emotions mean nothing on my last trade, and neither does my last trade mean anything on my next one. And I told myself no matter my p/l it doesnt mean anything for the next trade so I should keep going. I have to stop it because regardless of how I feel about it, I still perform poorly. My best days are effortless. My worst days are filled with tilt. 

SOLUTIONS

-I am talking about my scalps and adds. My risk on these trades are based on tape and a bit of slippage. When I enter these trades, I expect it to go right then and there and not come back. So when I am in these trades and it stalls at all, thats a problem, When it comes back on me a tick or two thats a problem. Thats when I freeze. I let it go to far, hope causes me to hold on thinking itll come back. If it comes back on me, its not the breakout I am looking for. I find myself waiting for just one extra tick to wait and see. The fix is to follow the plan, get out when it comes back on me at all. Also to adjust my size for more slippage. If this happens to me more often than not then I should play with size to reflect that. 

-I need to do a better job at calculating my size. My plan for big picture trades is $50 on all entries and adds if 2 star, and if the best $100. For scalps its $25 on each entry, Reversals are $25 per entry, and if Vshape $50. I also have to start accounting for slippage and spread better. Too many trades reaching past -1R. It also goes back to how I record my data. The number to stop out at is decided before entry. I must make sure im not adjusting it just because thats where I got the fill out when I got out. And on the other hand, if its a winning trade and the stop never came in play, if I enter in what the minimum would have been, thats why I am seeing my avg risk on wins always smaller than on losers. 

-I have made rules for myself to walk away when I need to. Im reading the book Atomic Habits and one chapter sat well with me. It was about eliminating bad habits and making them invisible. I cannot trade poorly, if I am not at my desk to trade. The chapter was about shaping your environment to fix the problem.

   After the open,

         -3 non complaint trades = Walk off for 30 minutes

         -3 losses in a row = Walk off for 10 minutes

         -6 Losses in a row = done for the day. (If I lose 6 straight trades, This should put me at an avg D gain, down.)

   Once 11am hits, there are new rules

        -Trading day is over once I am at +$100, If I am above and drop down, its done. If I was down and brought myself up to, its done.

        -1 non compliant trade = walk off for 10 min

        -2 non compliant trades = done for the day.

  

My thoughts and themes from the month seem to come in 3s. After 3 Ls thats when I start slipping and start forcing trades and bad habits come in. 

-Eliminate non compliant trades.

     -From entry and selection, to risk and size, to management. 

WHAT IS CHANGING

-Risk on all trades accounts for slippage and spread. 

-Size on trades must be smaller to reflect slippage and prevent too many more than -1R trades.

-Keeping my emotions in check. By having a walk away system I allow myself room to breath when im on tilt. In the past when im on tilt I keep trading, taking larger risks, losing more, getting more tilted. 

-Being faster at exiting scalps, adds and reversals when it doesnt do what I want right away. 

 

GOALS FROM LAST MONTH

-Revisit risk plan

          -Risk plan was good. But still wasnt enough. I had to separate it up more. Now is much more defined, so much so that I have 2 separate spreadsheets ive created. One for scalps and reversals. And one for big picture ideas. Cleans things up, easier to read, more consistent stats. 

-Trade Less

        -Well interestingly enough, it ended up being more because of me scalping things. And as always, shouldnt be look to be scalping anything and everything. So trading less isnt the right goal here. At least not anymore. It should be trade what im supposed to trade. 

-Missed trades folder with less screenshots

       -This month has been so bizarre, I dont have barely any in my missed folder. Nothing was clean and clear or really good enough to take in almost all days. 

-Clearer picture on momo scalps

       -Much better. Working on a best scalps folder to narrow down what I need to avoid.

-Sober October

      -No. Didnt happen, but did make improvements. New plan is working well for cleaner, fresher mind.  

-5am Workouts

      -Nothing makes you feel more like a badass, then doing badass things. Ive fallen in love with the crack ass of dawn early workouts. 4 Days a week. Come home after gym, still tired, but pumped. Time for chilling before the open. Less stressful. Its a great routine. 

GOALS FOR END OF NOVEMBER

-Scalp more SPY. I can be good at it. 

-90% Compliance

-Risk not inverted on W and L. Consistent throughout.

-Do not ignore walk away rules.

-Risk accounts for slippage and spread. Smaller size all around. 

-Be better at exiting scalps/adds/reversals faster. No more waiting and seeing. 

FINAL THOUGHTS

I feel good about this review. Last month most of my efforts were towards reducing trades. Being specific with what kind of entry the trade was. What did I need to avoid. And this month I did well with it. Got even more descriptive with 2 separate spreadsheets to record and have different data. I ended last month with a new risk plan. And it wasnt enough. I had to be more specific when it came to scalps, adds, and reversals. And now I have it. And even then I had only just noticed how I can be trading around a core and add from there. Weirdly feels like ive come a long way this month even though its been such a set back.

And the main reason is risk. How I am supposed to be using risk to my advantage, yet the month has been to my disadvantage. If I follow my rules, I shouldnt be having these issues. The wins and losses will come and go, but I must remain consistent in my risk. 

I am taking the next week off. Going to vegas for wedding trip, going to let myself chill and be away from trading. I have my plans in place for next time I sit to trade, already excited for it.