My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud

Wednesday, January 25, 2017

Overdue End of 2016 Recap

January Recap
February Recap
March Recap
April Recap
May Recap
June Recap
July Recap

Alright…….so you might have noticed that I fell off the face of the earth after July. As many of you know, I spent September and October traveling, as well as watching my beloved Cubs win the World Series. In November we packed our bags and moved, and December was filled with holiday trips and settling into our new home. Somehow, I found the time to squeeze trading in there. I'll start by recapping the last few months of the year that I don't have videos for, then give some overall thoughts relating to the year as a whole.

August: -$36,312.39
My only losing month of the year. Long story short - UPLMQ boned me. I shorted overnight, was caught in earnings because I forgot to check if they were expected, and then I was stuck in a huge gap up with no way to get out. Lost over $33k on that trade, then took one more stupid loss out of frustration a day later, before taking the last three weeks of the month off to regroup mentally.

September: $63,091.65
Slow and steady this month. Traded almost every day at least a little bit. Met a lot of great people in Orlando during Sykes' stock conference. Just went back to the basics, cut my losers; no wild swings of any kind.

October: $102,059.05
Met more amazing people at Traders4ACause! Also, OTC trading came back to life! Had a couple of large wins by shorting some marijuana stocks that ran, but put a HUGE dent in my month with a sloppy BTUUQ short. Broke every rule. Didn't cut my entire loss, added to a loser. I really was just playing too much size given the lack of liquidity and difficulty of fills. Lost $60k in one day on it, made almost all of it back on a big BTUUQ short the next week. But the loss was a huge blemish on my record and went against EVERYTHING I had been working towards this year.

November: $73,340.35
Insanely lucky to escape this month green. Was trading very well through the first two weeks, then was incredibly sloppy with DRYS. Shorted what I thought was a tiny position at $15 and basically decided there was no way was I covering - this pig was going to come DOWN! Well, I was finally scared out in the $70s. The next day I made matters worse by once again breaking my golden rule - I added to a loser. Took two huge hits on DRYS for -$110,000 and $-70,000. I, thankfully, managed to recover almost all of it in the next two days as the shipping sector crashed, and then promptly gave myself a week-and-a-half timeout from trading. Again, just a terrible breach of my rules.

December: $118,677.70
Back on track. No huge losses. Cut all losers, had some great winners, showed some good patience on a few swings short. Perfect way to end the year after a few sloppy months.

Overall 2016 Results: $906,665.20  (NOT Including $138,300ish in total fees (locates, interest, platforms, etc.))

One quick question I want to answer that I get often. My monthly/annual stats that you see include my trade commissions but NOT my locate fees. I never really look at those until I'm doing my taxes. I just consider them a cost of doing business. I'll update this post with the exact figure once I know it.

This year was a huge step in the right direction, but I have a long way to go. The theme of the year was getting myself back under control and cutting my losses. While I’ve come a long way from where I was in 2015, it isn't good enough. I'm very bothered by the fact that I took three HUGE losses in the final three months of the year, after being nearly perfect up until that point. There are a couple of possible reasons for this:

1. Loss of focus. I was traveling and moving, trying not to take trading too seriously. It's very possible that I just became mentally lazy. If this is what happened, I MUST be sure in the future to hold myself accountable to my rules, even when I'm not in my office.

2. False sense of accomplishment. After 7+ months of controlling my losses, possibly the best I ever have in my career, I may have just let my guard down and said, "Mission accomplished!”  I compare it to baseball when you see a relief pitcher come into the game in a jam, get the first two outs, and THEN give up the big hit. I think it's more likely that this is the mental trap I fell into, and I'm determined not to repeat it in 2017. No matter how successful you become as a trader, the mental battle is NEVER over.

Overall though, great year in 2016 and a nice step forward. I'll continue to slowly increase my size into 2017, as I start the year with maximum of $3000 risk per trade (except for the rarest/best of opportunities). But I have to EARN the right to play larger each month!

2017 Goals:

1. Make it through the WHOLE year maintaining my discipline. Cut my losers, and if I get stuck, NEVER add.

2. Work on learning fundamental analysis (listed stocks only). Quick tangent - I've been blowing this off for a few years now. My assumption always was that price action rules all, and what big money is doing is what matters in a trade. However, although I'm still in the early stages of learning, I'm quickly seeing that I was wrong. There is a HUGE advantage to be gained by digging through the fundamentals, especially matters relating to share structure of a company. While there's been a tremendous amount of opportunity this month, January has already blown my best month in 2016 out of the water, and I don't think that's a coincidence. I'm incredibly excited to see where this path leads me. The combination of technical and fundamental analysis appears to be a lucrative one. I suggest anyone else looking to head down this path start by following and reading everything posted by @AuspexResearch. Then the rest is up to you.

I'm unsure of what kinds of updates I'll be providing throughout 2017 or whether or not I'll be providing or posting more videos. Time will tell. That said, I wish you all the best in your journeys, and hope that you take every mistake you make as a learning opportunity!