Year 2007 Recap

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?