Saturday, February 3, 2018


I really should get back into blogging...

Anyway, this were my results for 2017.


Trades taken: 81
Equity growth: -6.58%
Maximum drawdown: 14.08%
Average risk per trade: 1.06%
Profit factor: 0.82

These were my results for 2016...

Trades taken: 121
Equity growth: 15.3%
Maximum drawdown: 8.61%
Average risk per trade: 1.18%
Profit factor: 1.26

So I made a loss of -6.6% at the end of 2017. It's not a good thing. I initially started the year with blistering position sizes between 2% and 3%. I felt very confident after being profitable for two running years.

By mid-year, my drawdown approached 14%. I'd begun reducing my position drastically to around 0.5%-1%. 

One particular trade blew a 5% hole in my trading account (mentioned here). 

I noticed some psychological effects in my trading as a result of an extended drawdown:

1) I traded less. In a way, this is a good thing. If you have a negative edge, you WANT to trade less, and ideally, not at all. But because I traded less, my self-identity as a trader began to fade. In my opinion, during extended drawdown, try to trade, but trade extremely small. A token position worth a few dollars may be preferable than nothing at all. At least you'll stay connected with the market, and get cheap feedback on your trading. 

2) I spent more time on other hobbies. It's good to diversify your interests. But because I was doing other things, I spent much less time on research and backtesting, which impaired my self-improvement as a trader.

3) I began losing vision of my future. This is probably the big one. When your dream begins slipping away, it's very easy to grow disillusioned. You lose alot of motivation. Honestly, I don't have a solution to this, except to just keep grinding, and perhaps to keep your vision vague? I know some people recommend setting specific targets to hit, so you can find the most efficient strategy to hit those targets (e.g. to lose X kilograms per week, I need to reduce my daily energy intake by Y calories). But you can't do that with something as unpredictable as trading. Just take one trade at a time and execute. 

So what to do?

I made a list of what I think are positive and negative sources of edge here. This wasn't a random exercise. I wanted to see what I could implement (or get rid off) to get my trading back on track.  

Going into 2018, I'm sticking to a single strategy for now (low volatility breakout). I don't have full confidence in some of the other systems I developed. My #1 goal is to finish 2018 with a positive number. The size of that number doesn't matter, as long as it's positive.

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