An excellent end to today’s trading is welcome relief from the murky depths of hopelessness I’ve been feeling over the last week. I was starting to wonder if I really could carry on the way things were and was even advised by a fellow trader to stop trading in a live account to help ease my lows.
I was this close to listening too and going back to the drawing board in paper trades.
Fortunately, I had a few positions open that I wanted to let run their course before making any decisions about what to do next and I’m glad I did. Whilst I’m still almost £400 down from my starting capital, I am confident the progress I’ve shown in the last week is enough to keep me going for now.
I’m calling this my October System, because mu March, August and September systems didn’t work and hopefully this is the one that will provide me with that life of luxury I’m chasing.
I talked about my October System yesterday, and how the cornerstone of the system is based on a sound financial viewpoint that spins some traditional views on their head. Most notably:
- Forgetting the notion of ‘wins’ and ‘losses’ and replacing them with the idea of costs and revenues
- Assuming a small success rate of 25% : 100 trades, 75 losses(costs) 25 wins(revenues)
- Managing your capital so that you can give yourself the best probability of generating revenue that is at least 3 times your costs
I also said I’d post another post later about how I actually picked the markets I was trading in and I am still going to do this as soon as I can but for those of you who follow me on twitter, you’ll have seen me post up positions I was thinking of opening as they happened.
Today, for instance, I popped up Dean Foods Inc (NYSE:DF) as I found it. A few minutes later I opened the position and it’s now showing a tiny paper profit. Likewise a couple of days ago I popped up Aetna Inc (NYSE:AET) and BE Aerospace Inc (NYSE:BEAV), both now showing handsome paper profits.
These are some examples of the trades I’m making and I’ll go through how I’m picking them soon, but if you can’t wait, just follow me on twitter.
Anyway, back to the reason for this post.
I almost quit and went back to paper trading yesterday and now I’m feeling excited again that just maybe I can develop my skills as a trader and turn my meagre £500 starting capital into the lifelong source of income that I’ve been searching for.
The moral of this story I guess is to remain vigilent, stick to your desires and learn, analyse and measure all of the time. Strive to improve those success rates and make sure that every trade is recorded with some corresponding notes that explain the reasons why you chose the trade, why you exited (how you exited?) and then asses this list in it’s entirety at the end of each month.
With that, I’ll leave you with an insightful quote from Jesse Livermore, mentioned in the book ‘Reminiscences of a Stock Operator’ by Edwin LeFevre.
“The speculator’s chief enemies are always boring within. It is inseperable from human nature to hope and to fear…the successful trader has to fight these two deep-seated instincts.
He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a bigger profit.”