6 month check point

In November of last year you may recall that I opened up an account with interactive brokers with $17,000 and my primary goals were as follows:

1) Develop a trading business plan. I do have a working document in place and plan to continue working on it over the next six months.

2) Learn as much as possible as well as try new strategies. I would have to say that the learning curve that I have tackled in the last 6 months, just amazes me. I have made more progress in the last 6 months than the whole 3 years I have been involved with the markets.
 
3) Remain profitable during the process. I actually set out a goal to make $500-$1000 a month not really knowing what to expect. As you will see below my total realized gain over the 6 month period that I set for myself came to $1,839 or 10.8% gain. I did not hit my target average monthly profit, but I nonetheless was able to remain profitable while learning a ton and trying out many different things.

Link to Full trading results for April

Lets take a more in depth look at my results for the period 11-2009 to 4-2010. First lets dial in on the profit by idea source. I paid for the premium subscription from IWO for education and idea generation. I also have some ideas that come from free sources T3 live and ONN.tv. The problem I have found is that I don't do very well just following other peoples ideas without making them my own. And although I have reigned in my impulse trades from my own ideas, I tend to be prone to make impulse trades off of their recommendations. And because they were not original ideas, A lot of times I have trouble managing them as they suggest. As you can see from the table at the right, my results clearly tell me that I am better off following my own trading ideas. And I think this makes sense because I put a lot more thought and analysis into my trades before I make them. So as of today 4-20-2010 I will only be making trades based on my own trading ideas. My current subscription to IWO will be for educational purposes only and for that it has been great.

Briefly here I would like to set a goal to have largest gain equal to my largest loss. Eventually I would expect that my largest gain would be bigger than my largest loss, at least that would be the goal overtime. Also realize in the summary of monthly results at the top of this page that February was my worst month and was also the month that I created and clearing defined the risk parameters to my overall trading plan.

Now lets focus in on my Win/Loss Rate and holding period. Here the % winners to % losers is about what I had expected. I had mentally thought that I had about a 60% win rate, and now I have the numbers to confirm it. But what I really want to dial in on is my average holding period and more specifically on the average holding period for my winners of 10.91 days. I have reviewed many trades after closing them out. What I had noticed in my winners is that I leave a lot of profit on the table. And I know why this happens, it is because I always remember the last loser I booked and am quick to book profits before they evaporate to cover my last loss. But from reviewing many of my winning trades after closing them I have noticed that with just an extra 5-10 days the profit targets that I set for the positions are realized and are usually 2-3 times larger than the profit I actually booked. In my calculation the results in thousands of dollars in low hanging fruit that with a few mental adjustments could be realized. So my goal over the next 6 months is going to try and hold those positions a bit longer when I am in a position of profit, in other words I will let my winners run. I think that I have done a good job cutting my losses and the average loss that you see in my opinion is skewed a little bit because of large losses that I took that under my new risk management system outlined in my trading business plan would not occur save any un-controllable event. What I mean is my risk management rules that I have in place would had stopped me out way before my losses got out of control. For example the largest loss from above of $1,040 would violate my maximum 3% of total portfolio risk, which at $17,000 would be $510. But I did not have this in place during the first few months of trading in this account.

That is really all I wanted to dial in on. But with that said I would also like to outline some new goals for the next 6 months:

1) Only make trades based on original ideas and analysis. Meaning I will only use IWO as educational source.
2)  Let winners run to capture low hanging fruit. This will most likely be seen with an increase in both my average gain as well as an increase in the Average holding period.
3) Largest gain to be greater than or equal to that of my largest loss. Overtime this will ideally be greater.
4) Make enough profits to hit my 15% annual return goal.  This means that I need to take my total gain from $1,839 to $2,550.
5) Continue to work on trading business plan.

Good Luck Trading!