I last revised my business plan about a year ago. I spent this afternoon going over my numbers and changes in beliefs and here are the changes I discovered:
1) My risk tolerance has become much, much more conservative, probably because I realised just how badly drawdown can kick you in the guts. I initially planned position sizes ranging from 2% to 12% equity, depending on each trading system's expectancy. These days I only risk an absolute maximum of 2% equity per trade, dropping to 1% when drawdown exceeds 10%.
2) I now use an anti-Martingale money management strategy to limit my losses during drawdown. A normal Martingale strategy would be to double your bet (or position size) after a loss. Suppose you bet $5 and lose, your next bet will be $10. If you lose $10, your next bet will be $20. If you lose again, you will bet $40 etc. The idea is that eventually you'll win a bet and make up your losses. But as you can see, every time you lose, the size of your bet gets big pretty quickly. Lose enough bets in a row, and the size of your next bet will be more than the money you have left. When this happens, you are ruined.
An anti-Martingale strategy does the opposite, in that you reduce your bet or position size after a loss. So if I bet $5 and lose, my next bet will be $2.50. If I lose again, I will bet $1.25, and so on. This is what I use during a bout of drawdown (10%+). This is especially useful for traders since it will save your skin when you have a negative edge. As the old saying goes, a dollar saved is a dollar earned. The downside to an anti-Martingale strategy is that it will take longer to crawl back from your losses. If I lose $5 and start betting $2.50, I will need to win two times to make up for my loss. But you will protect yourself from ruin.
3) Conversely, I use a Martingale money management strategy when I'm winning. My strategy is to increase my position size to 2% once I've grown my initial equity by 10%. I'm still deciding if or when I should increase my position to 3%, perhaps once I've grown equity by 25%. But the logic is that if you're winning and have a good read on the market (or if your trading systems are performing optimally), you should jam the pot and bet more while these conditions last.
4) I had a very optimistic goal of becoming a full-time trader by 2015 (next year). This is now unrealistic, especially given my reduced risk tolerance. 2017 might be a more-accurate possibility.
5) My original plan envisioned trading 11 currency pairs. I trade alot more pairs now, including gold and silver and more obscure pairs like the USDHKD or USDSGD. Perhaps next year I'll expand to trading other markets like oil or stock indices.
6) Probably the biggest change is the shelving of my weekly timeframe systems. I know myself alot more now, and I don't have the kind of personality that can hold trades for weeks without tampering with them.