It's been another wild year. Yet, the most rewarding trading year in my life. Since 2002 when I first started trading, I wanted to quit trading so many times. What kept me going was just my passion (and stubbornness). I kept telling myself, 'Just one more push...' I felt as if I was just so close and I've been doing it for years. My wife's patience eventually ran out and I did go out got a job.
2007 was also the first year that I had a full-time job. My expectation was that I was not able to trade at all, just saving money until I quit my job. It didn't take long that my work environment is very flexible that as long as I can get my job done, what I can do in terms of trading is not limited.
-Forex recap:
I traded spot forex heavily for 4 months early this year. Considering trading mini-lots, I did quite well. I made about $500 on $1K account. I suppose 50% return sounds better?
-Stock options recap:
I traded stock options in the first half of 2007. Made some and lost some. At this point, I will probably not going to spend more time on stocks, but maybe position trading on my retirement account.
-Futures options recap:
This is where I saw lots of good opportunities. I never sold options because I always thought selling options is the worst one could do. One could even lose a shirt I heard. Later, I realized that options are all about selling because it is the fact that options' value go down as time goes. Why not take advantage of this instead of buying calls/puts where time is against me. Technical analysis is great, but in trading, fact-based systems have higher probabilities.
I didn't make lots of trades, but believe it or not 100% are winners. I traded wheat and cocoa with average profit of $1K per trade. Prior to this year, I only traded stocks and index futures, but I started trading soft and grains and they are not much different.
-Futures recap:
I did both day-trading and swing trading this year. As I said in my previous post, I thought the only way to minimize my risk in trading futures is to day-trade. My view was completely changed this year and my P/L proves that too.
In April-May, markets were trending nicely. I bought YM and held it for about 3 weeks netting $4K per contract. It was a slow and grinding process, but if you traded markets long enough, an up-move tends to be very slow and a down-move tends to be fast. I followed 'Market Structure' and stayed until it was violated. Even though I left quite a bit on the table, I took a piece of meat in the middle.
As I started getting interested in 'Fact based trading', I was scanning through charts and found that cotton was trading at dead low in a few decades. For this kind of trade, I was willing to lose $10K+ until it finds its way out. I bought it and held it for a month netting $3.5K per contract.
I also swing traded on Gold and Corn both netting 1K each. Even if I was willing to hold it for a long time, both turned out to be quick less than 12 hour trades.
There is one more trade I like to mention, but I will save that for later post. Let's call it the best trade of 2007.
My approach to markets became different this year, but I still have to work on my patience. I tend to watch markets so closely like a day-trade on a swing position. Often, I get too nervous and decide to get out, which results in leaving a lot of the table.
How did I do on day-trading? Not much. I haven't really calculated my P&L for day-trades only, but I am sure I lost quite a bit both in commissions-wise and points-wise. To me day-trading is a very stressful job. My heart is pounding every single time I get in a trade. I tend to move my stops ending up losing way more that I should. I do lots of 'revenge' trades and lose more. I really admire those (including, my friend, JP) who make good money from day-trading.
Will I give up on day-trading? Not really. I would like to do 80% my trades in swing/position trades and the rest in day-trading. One good news is that I found things that consistently work for me and would like to strictly follow the plan next year.
What I should have done or every trader should do is to log every single trade. This will significantly help trader in a long term basis. Another thing I wish I could do is to separate day-trading account from swing one. This way you can easily keep track of each account's performance.
All-in-all, one can laugh about how little money I made, but this money is very encouraging to me. I always tell myself that it's matter of lot size once I find what works for me and that time is near me.
How did you do in 2007?
Monday, December 31, 2007
Wednesday, December 19, 2007
Markets I trade
Here are the markets I trade:
Indicies:
YM (Mini-sized Dow)
ES (E-Mini S&P)
Grains:
C (Corn)
S (Soybeans)
W (Wheat)
Energies:
CL (Crude Oil) or QM (Mini-sized)
NG (Natural Gas)
Metals:
ZG (Gold) or YG (Mini-sized)
ZI (Silver) or YI (Mini-sized)
Softs:
CT (Cotton)
CC (Cocoa)
Forex
For day-trading, I trade YM, grains and metals.
For swing-trading meaning buy/sell outright, I trade YM, C, S, W, QM, YG, YI and Forex.
For options, I trade all above plus some more softs (e.g., Lumber).
I used to believe that one has to pick one market and has to master, but it really depends on who you are. My friend, JP, only trade ES for 6 years and he is really good at day-trading it. I started the same way as JP did, but was not making money. Now I'm more into swings looking at different markets and I love it. Above all, I'm profitable doing so.
Those who just started trading or have been struggling may want to different markets or different time frames. Every market has different personality. You might better suit yourself in grain markets or even metals. It's a misconception that you have to trade stocks because futures are risky, or you must trade indicies etc.
Indicies:
YM (Mini-sized Dow)
ES (E-Mini S&P)
Grains:
C (Corn)
S (Soybeans)
W (Wheat)
Energies:
CL (Crude Oil) or QM (Mini-sized)
NG (Natural Gas)
Metals:
ZG (Gold) or YG (Mini-sized)
ZI (Silver) or YI (Mini-sized)
Softs:
CT (Cotton)
CC (Cocoa)
Forex
For day-trading, I trade YM, grains and metals.
For swing-trading meaning buy/sell outright, I trade YM, C, S, W, QM, YG, YI and Forex.
For options, I trade all above plus some more softs (e.g., Lumber).
I used to believe that one has to pick one market and has to master, but it really depends on who you are. My friend, JP, only trade ES for 6 years and he is really good at day-trading it. I started the same way as JP did, but was not making money. Now I'm more into swings looking at different markets and I love it. Above all, I'm profitable doing so.
Those who just started trading or have been struggling may want to different markets or different time frames. Every market has different personality. You might better suit yourself in grain markets or even metals. It's a misconception that you have to trade stocks because futures are risky, or you must trade indicies etc.
About Me
When I was in a grade school, my mom often asked me to deliver some forms and messages to her stock broker . Of course, I didn't know what was delivered, nor did I care. All I knew was she was buying and selling stocks.
One day she asked me, my brother and sister if we wanted to invest our money, which we got from our relatives and parents. I chose to leave my money in a bank, so that I could buy a candy whenever I wanted. It didn't take long until she doubled my brother's money not once many and many times, but I guess I didn't like the fact that my mom wanted to take my 'hard-earned' money and do something. It was clearly a bad decision.
We were subscribing newspaper similar to wall street journal instead of typical newspaper. I hated it because when my friends talked about TV shows and sports, I couldn't get involved with them as much as I would have liked. Internet? I didn't exist. What did a grade-school kid know about economy. The newspaper was very boring, but I eventually started getting interested in what they were talking about.
On a typical Sunday, Jan 2002, I was flipping channels like a maniac (I have this strange habit of flipping channels continuously until I find something interesting). The thing that caught my eyes was an infomercial. Luckily, it was neither Toby steam iron nor rotisserie. Instead, it was about 'Being a day trader.' They were offering hassle-free videos. I was completely sold for one of those phrases, 'if you call now...' Perhaps my inner body was responding to trading.
I watched all 6 tapes in one day and attended webinars that the company that sold tapes was offering. There were 3 'mentors' in that company; one who claimed to make over a million dollars in stock markets, and two who used technical analysis for trading setups.
Long story short, it was waste of my time and money. I had to start somewhere, but they were more interested in selling under 'We're big into education'. I, probably like many other new traders, thought I could earn money while learning. A big mistake. They called trades but never gave out why they took the trades. I left their hefty $300 chat room/month eventually with a big hole in my portfolio.
Good news is I met one nice guy, JP. We started trading about the same time and we exchanged trading ideas staying in touch through out the day. JP used to pitch in college with Bob Brenly and Jim Tracy as a starting pitcher. Unfortunately, he was injured and had to give up his major-league dream. JP is a retiree and he is trading as a new profession. His approach to trading was totally different. While I was consistently losing money, JP was very patient. He tested his setups again and again before he risked his real money. I remember one setup he was testing... He was doing it for 8+ months. I thought it's impossible for me to make a career out of trading. But he proved it to be true, which is why I haven't given up my dream.
Going back to where I was, I became a member of another chat room or hotcomm. This guru is supposed to be a former CEO / MBA or whatever, was teaching how to trade using volume. It made sense because volume is a proof if a particular move is real or not. But then again, he ended up being the worst trader I've ever experienced. He added onto a losing position under an excuse of 'scaling in' upsiding down more than often. I remember one day I lost 20% of my portfolio when he was calling 'Keep shorting' while ES was rallying 20pts. Heck, Later I found that he was not even trading real money. He showed skills off of simulation dome. I was able to make about 8 million in simulation. At the end, he was a salesman as well. I left the room with another big hole in my portfolio.
It was 2004. All I had left was $5K. I was willing to give one last try before giving up. I bought one black box trading system. My friend, JP bought this system and gave me good feed backs, so I put $3K on my credit card. The system worked out great, but if you can recall 2004-05, markets didn't have as great range as now (as of Dec 2007). Traders god excited to see 10pts ES move. The system was great when markets were trending, but otherwise I got chopped out quite a bit.
However, at this time, things were different. Before, I was eating like a bird and poop like an elephant, but now I found myself taking as high as 100 YM pts profit day-trading. It's easier said than done, 'Let your profit run, and cut your loss short.', but I was really doing it. After 2-3 years of loss, I finally realized how this game works. Heck, I don't have to win every time any more.
I also soon realized that my $5K portfolio is not enough to trade. I was over-leveraging and under-capitalized not to mention over-trading. Therefore, I decide to back up a bit from trading and have a job that I can save money at the same time I can study more about markets. I majored in computer engineering, so I started working as a programmer. I could have gotten a hardware related job, but trading and programming has lots of correlations. I write my own indicators and have actual codes that are offered over $2K somewhere.
Now I'm writing my first blog (as of Dec 19, 2007) and I still work for the same company as a software engineer. What have I done since started to work? This is in fact my first profitable year (even after all trading expense). My view of trading has gotten changed quite a bit. I used to think that the only way to reduce my risk is to day-trade so that if an event like 9/11 happens, I won't lose my shirt. Boy, was I wrong. Or I might say, I found the trading style that I like.
Now I'm more of a swing trader. I used to pay so much commissions day-trading. I remember doing 100+ round turns on futures while I'm barely profitable for the day. 100 round turns were about $500 for commissions. One day, I thought, 'Why don't I use that money as my stop and trade just once in a while?' If you look at any market with exceptions of energy or some volatile markets, you should be able to give enough room for markets to wiggle using $500 stop on a single contract. Surprisingly, my account started growing. I never thought I could make $7K on a single trade per contract.
When I used to day-trade, I felt like I had to make money every day, or I was a loser. Now that I have a full-time job, I don't need to make money from trading, which helped me a lot on executing my trading plan.
Trading, just like any other profession, is not an easy business. You need to have a commitment. It gets frustrating more than anything I have experienced with, but is it worth it? Yes! I have a very small dream. I don't need to make million dollars. Just enough to buy a small 3-bedroom / 2 bath house (although I will take a jetted tub), dine out once every or other week, pay insurance premium for my family etc...
I'm not sure when I can quit my job and start trading full-time, but I know it'll come.
To readers of my blog,
I'm not the smartest person in the world. If I can do it, you can do it too. Just don't give up yet.
One day she asked me, my brother and sister if we wanted to invest our money, which we got from our relatives and parents. I chose to leave my money in a bank, so that I could buy a candy whenever I wanted. It didn't take long until she doubled my brother's money not once many and many times, but I guess I didn't like the fact that my mom wanted to take my 'hard-earned' money and do something. It was clearly a bad decision.
We were subscribing newspaper similar to wall street journal instead of typical newspaper. I hated it because when my friends talked about TV shows and sports, I couldn't get involved with them as much as I would have liked. Internet? I didn't exist. What did a grade-school kid know about economy. The newspaper was very boring, but I eventually started getting interested in what they were talking about.
On a typical Sunday, Jan 2002, I was flipping channels like a maniac (I have this strange habit of flipping channels continuously until I find something interesting). The thing that caught my eyes was an infomercial. Luckily, it was neither Toby steam iron nor rotisserie. Instead, it was about 'Being a day trader.' They were offering hassle-free videos. I was completely sold for one of those phrases, 'if you call now...' Perhaps my inner body was responding to trading.
I watched all 6 tapes in one day and attended webinars that the company that sold tapes was offering. There were 3 'mentors' in that company; one who claimed to make over a million dollars in stock markets, and two who used technical analysis for trading setups.
Long story short, it was waste of my time and money. I had to start somewhere, but they were more interested in selling under 'We're big into education'. I, probably like many other new traders, thought I could earn money while learning. A big mistake. They called trades but never gave out why they took the trades. I left their hefty $300 chat room/month eventually with a big hole in my portfolio.
Good news is I met one nice guy, JP. We started trading about the same time and we exchanged trading ideas staying in touch through out the day. JP used to pitch in college with Bob Brenly and Jim Tracy as a starting pitcher. Unfortunately, he was injured and had to give up his major-league dream. JP is a retiree and he is trading as a new profession. His approach to trading was totally different. While I was consistently losing money, JP was very patient. He tested his setups again and again before he risked his real money. I remember one setup he was testing... He was doing it for 8+ months. I thought it's impossible for me to make a career out of trading. But he proved it to be true, which is why I haven't given up my dream.
Going back to where I was, I became a member of another chat room or hotcomm. This guru is supposed to be a former CEO / MBA or whatever, was teaching how to trade using volume. It made sense because volume is a proof if a particular move is real or not. But then again, he ended up being the worst trader I've ever experienced. He added onto a losing position under an excuse of 'scaling in' upsiding down more than often. I remember one day I lost 20% of my portfolio when he was calling 'Keep shorting' while ES was rallying 20pts. Heck, Later I found that he was not even trading real money. He showed skills off of simulation dome. I was able to make about 8 million in simulation. At the end, he was a salesman as well. I left the room with another big hole in my portfolio.
It was 2004. All I had left was $5K. I was willing to give one last try before giving up. I bought one black box trading system. My friend, JP bought this system and gave me good feed backs, so I put $3K on my credit card. The system worked out great, but if you can recall 2004-05, markets didn't have as great range as now (as of Dec 2007). Traders god excited to see 10pts ES move. The system was great when markets were trending, but otherwise I got chopped out quite a bit.
However, at this time, things were different. Before, I was eating like a bird and poop like an elephant, but now I found myself taking as high as 100 YM pts profit day-trading. It's easier said than done, 'Let your profit run, and cut your loss short.', but I was really doing it. After 2-3 years of loss, I finally realized how this game works. Heck, I don't have to win every time any more.
I also soon realized that my $5K portfolio is not enough to trade. I was over-leveraging and under-capitalized not to mention over-trading. Therefore, I decide to back up a bit from trading and have a job that I can save money at the same time I can study more about markets. I majored in computer engineering, so I started working as a programmer. I could have gotten a hardware related job, but trading and programming has lots of correlations. I write my own indicators and have actual codes that are offered over $2K somewhere.
Now I'm writing my first blog (as of Dec 19, 2007) and I still work for the same company as a software engineer. What have I done since started to work? This is in fact my first profitable year (even after all trading expense). My view of trading has gotten changed quite a bit. I used to think that the only way to reduce my risk is to day-trade so that if an event like 9/11 happens, I won't lose my shirt. Boy, was I wrong. Or I might say, I found the trading style that I like.
Now I'm more of a swing trader. I used to pay so much commissions day-trading. I remember doing 100+ round turns on futures while I'm barely profitable for the day. 100 round turns were about $500 for commissions. One day, I thought, 'Why don't I use that money as my stop and trade just once in a while?' If you look at any market with exceptions of energy or some volatile markets, you should be able to give enough room for markets to wiggle using $500 stop on a single contract. Surprisingly, my account started growing. I never thought I could make $7K on a single trade per contract.
When I used to day-trade, I felt like I had to make money every day, or I was a loser. Now that I have a full-time job, I don't need to make money from trading, which helped me a lot on executing my trading plan.
Trading, just like any other profession, is not an easy business. You need to have a commitment. It gets frustrating more than anything I have experienced with, but is it worth it? Yes! I have a very small dream. I don't need to make million dollars. Just enough to buy a small 3-bedroom / 2 bath house (although I will take a jetted tub), dine out once every or other week, pay insurance premium for my family etc...
I'm not sure when I can quit my job and start trading full-time, but I know it'll come.
To readers of my blog,
I'm not the smartest person in the world. If I can do it, you can do it too. Just don't give up yet.
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