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September Trades Analysis

All of my trades opened in September have now been closed so this sounds like the perfect time to take a look back over the month and find out how much I made (or lost).

It’s fair to say that September was another month of reading, studying & learning. Mostly, this was due to the fact that I didn’t have a lot of money spare to trade much in September after August wiped me of almost £500.

Between reading Reminiscences of a Stock Operator and brushing up on general trading strategies including work on risk & reward by Van Tharp and various trading blogs around the net (Investor Trader, Spreadbet Beginner, The Hovis Trader, UKValueInvestor), I did manage to place some trades.

Only 12, mind you, but perhaps that was a good thing? I found that taking the time for a breather was pretty useful in terms of knowledge acquisition. It’s just a shame that the lag between my acquisition of knowledge and change in practice as a result of it was/is currently too long!

Analysing September

OK, in the image above you can see all of the trades I made in September. If you didn’t notice, it was not a fruitful month in terms of capital growth 🙂

The point of this post is to take a look back over the month’s trades and summarise the key points but ultimately, what I want to do, is build up a trading library of past trades that I can continuously refer back to as I continue my journey to professional trader gambler.

The idea is to measure my results against several key measurements each month and then attempt to improve on them in the following month. The key measurements are:

  • Success Rate:
    The amount of times I ‘win’ a trade or get revenue from it.
  • Risk/Reward Ratio:
    A ratio used to compare the expected returns of an investment to the amount of risk undertaken to capture these returns. This ratio is calculated mathematically by dividing the amount of profit the trader expects to have made when the position is closed (i.e. the reward) by the amount he or she stands to lose if price moves in the unexpected direction (i.e. the risk). (Thanks Investopedia)
  • Profits/Losses:
    How much moolah I make or lose at the end of the month.
  • Total Return on Investment:
    Expressed as a %

Obviously the idea is to make a profit and grow my capital at a much higher rate than I’d get if I put it in the bank. Your rate of return may be different to mine and be based on your own investment goals but for my sake, I want to get very rich and experience 10% returns monthly.

I’d like to hear from you if you think this is too ambitious…

Summary

  • Total 12 trades.
  • Wins 3, losses 9. This means that in September I achieved a success rate of 25%.
  • Because my success rate was so low, it meant that I needed to achieve a risk/reward ratio of 3:1. That is, if I was risking £10 per trade, I needed to make my revenue generators (wins) return £30. As you can see from my trades, I was a LONG way from this and even though I made revenue in 3 of the trades, the amount generated was nowhere near enough to cover my costs.
  • Total LOSS: -£66.54
  • ROI: My starting capital for September was only £85, which means I lost 78%! of my capital.

Because I’m playing with such small amounts of money, the amount lost is not bothering me…but imagine if I’d started trading with a £1000 pot? I’d be looking at a loss of £780! Now that is something to think about. This just highlights the importance of trading with a test account before you try it for real and even when you do decide to go for real, try starting off with a small amount first.

October Trading Objectives

I intend to top my trading account up with some additional funds at the beginning of October. The objectives are pretty clear:

  1. Improve my success rate
  2. Achieve a 3:1 risk/reward
  3. Make a profit
  4. Grow my capital

I’ve already begun to make trades in October and I’ll be doing an analysis of those at the end of the month (probably into the beginning of next month, actually) but if you want to follow them as they happen, you can follow my twitter account too.

Hope you all had a better month than me!

 

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About Lee

Unconventional trader embracing intuition, martial arts & taoist philosophy to achieve two simple goals in life: Trade well. Be happy.

2 Responses to "September Trades Analysis"

  • Rogue Predator
    October 17, 2012 - 7:52 pm Reply

    Hi Lee,

    Just wanted to say I’ve enjoyed reading your site.

    Thought you might like this from Dickson G. Watts:

    Is there any difference between speculation and gambling?

    “The terms are often used interchangeably, but speculation presupposes intellectual effort; gambling, blind chance. Accurately to define the two is difficult; all definitions are difficult. Wit and humor, for instance, can be defined; but notwithstanding the most subtle distinction, wit and humor blend, run into each other. This is true of speculation and gambling. The former has some of the elements of chance; the latter some of the elements of reason. We define as best we can.”

    “Speculation is a venture based upon calculation. Gambling is a venture without calculation.”

    You are not a professional gambler Lee, you are a Professional Speculator 🙂

    This isn’t a tip because tips suck, but it might be worth taking a look at the long side of,
    Precious metal stocks like: Silver Wheaton, Pan American Silver, Yamana Gold, etc
    + Energy stocks like Hess Corp

    Over the next few months, potential is there for a decent move.

    Keep trading RP

  • Lee
    October 18, 2012 - 8:27 am Reply

    Hi Mate,

    Nice quote there, sounds about right. Whilst I’m no ‘professional’ yet (ie. making a full time income from my trading), I’m quite happy with telling people that I’m a Professional Speculator when they ask 🙂

    Will take a look at those stocks and do my own research, thanks.

    October is proving to be a better month.

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