My journey as a trader
1. Telling my story
My personal journey as a trader. My dad bought me my first stock when I was 16. It was SunLife financial and obviously he had to hold it for me in his brokerage as I was too young to have my own. I remember asking him everyday if the price went up or not. To my surprise it was a massive ripper, gaining 30% in about a year. A couple years later I decided to look back and I realized my dad had just lied about it going up to make me happy! Funny story.
2. I trade SPX
There is just too much out there. Too many stocks, too many markets, too many assets, too many currencies. What I found works best for me is to stick to one thing which is SPX and ES. I don’t even touch the Nasdaq. I keep it simple. The liquidity is king here. You can trade the SPX basically 6 days a week and through a variety of different instruments. SPY for the ETF, options on SPY, options on SPX, ES or MES futures, ES options, SPXL/SPXS for 3x ETFs.
3. Trade thesis and actionable trades
I give my predictions and probable outcomes and a couple of reasonable trades. It’s your job to manage your risk. And to follow my train of thought and hopefully learn how I got to the conclusion I came to. Live trade ideas with take profits and stop losses are available to my paid subscribers.
4. Journal and create your own bible.
I keep a google docs with all my daily trade logs. Look to create a PROCESS. Personally I write down a summary of the day after every trading day. As well as a premarket trade plan. Then I evaluate myself on whether I executed my plan or not. If I executed my plan, and still ended up losing money on the day, I consider that as a WIN. Trading is a game of probabilities and developing a winning PROCESS is the only thing that matters. This is a game where you want to win only the right way, following the right processes. Reason being is you have 1000 green trading days in a row, have millions of dollars. And it takes 1 trade to lose it all. Never forget that.
5. Specifics on what I do.
First off the tool I use for success.
-Interactive brokers: best broker IMO for options. No FX fee, you just pay whatever the market rate is. Great options platform, for complex multi leg options, spreads, and easy to access info on delta and such.
-AMP futures: great discount futures brokerage. $400 day trading margins on the ES. I use the CQG data
-CQG mobile app: futures trade 23 hours a day. So the reality is you will be living your life but ES may be trading at can’t-miss price. This is what I use to execute when I am away from my desk.
Daily premarket cheat-sheet.
-Important support/resistance levels
-Important news events such as CPI or FOMC
-A trade thesis. Such as “expecting a balanced day before big CPI release tomorrow. Looking to fade 3760 and buy 3700 as we await news”. You can help eliminate bad trades such as expecting a trend day when market is in a holding period waiting on a catalyst. Don’t fight against the whales such as Citadel/Susquehanna, trade WITH them.
-Max risk. What is the maximum risk you are looking to put on that day. This really depends on your overall account size. Ideally we would all risk less than 0.1% each day but let’s be realistic. There are certain barriers such as margin requirements and a threshold of fees the exchanges charge that make small amounts not worth the effort. I recommend personally a max risk of 1-3% a day if your account is under $5000. I mainly focus on futures so I always imagine the scenario as all my trades getting stopped out, what would my loss be, and if that loss is within my maximum risk threshold. As you grow your account your risk as a % should grow smaller. Beware of people on twitter saying max risk should never be X% or you’re a bad trader. Reality is there is no one answer for everybody. If I make 200k/yr in my day job for example, what the point of trading 1 MES for example. You will never get the real experience of trading if you trade paper or too small in my opinion. When the money matters, it changes the game entirely. You only know this from experience. Ultimately, look at these factors. How big your account is. Margin requirements. Your income from other sources such as your day job.
Getting off tilt.
More to come on this as this is what causes many many traders to ultimately quit. You need to know and to be able to step away and regroup. There are so many opportunities in the market and there will be until the end of time. Know this. So when you’re tilted, shut it down. Not even for an hour or day but like a week. Go live your life and get some perspective. I have found that spending money actually saves you as you remember money can buy physical, nice things. It can pay for a nice vacation to Mexico, or a nice meal with the girlfriend. Remember that so you don’t get too reckless. I always cap my max weekly loss at 10%. If I hit a 10% drawdown I shut it down for a week usually to reset emotionally. Why 10%? Because to recover from a 10% drawdown you need to make 11.11%. Very very possible and not at all an insurmountable hill. But if you are down 50%? You are fucked and in a big hole and will be swinging big (and probably missing) trying to hit huge home runs to “make back” what you lost so you can stop feeling like a degenerate gambler. To get back to even from a 50% DD is 200%. Really hard to do without taking huge amounts of risk. So I keep it at 10%. 11.11% to come back from a 10% drawdown. That my line.
Review the day.
Grade yourself on if you executed your plan or not. I recommend the book Atomic Habits by James Clear. He talks about how powerful small habits you repeat every single day are. Writing out a plan every single day, grading yourself everyday, and looking to rectify mistakes that you made everyday compound over time and you will find yourself on the pathway to consistent profitability. The most important thing I look at when reviewing is if I met my maximum risk threshold. I log the days where I never exceeded my planned risk and I count them, like an alcoholic counts days of sobriety. Don’t doubt how powerful the psychological effect of creating habits are. Process is everything. Habits, process, systems. Execute like a computer program.
End the day.
This is not some filler column bullshit. It’s actually best for your trading to step away. I find going out for a drink or meal at a restaurant is priceless. It reminds you of what money can buy. A fun night out. A delicious meal. A perfect crisp glass of Chablis. Don’t get caught up into seeing trading as a bunch of numbers on a screen. It makes you forget about risk. When you can have a blast on spending $200 in an evening, you are reminded of the value of money. The value of what you are risking. And you can’t take it with you when you’re gone either ;).
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