200705 - Month-end Review (Paper)

I did not trade much during the month of May, mostly due to a very hectic schedule at work. I was stuck in a week-long meeting earlier this month, and a few more day-long meetings really took out most trading days from this month.

3 wins and 6 losses

In summary, I traded only 5 days in May. May 15, 16, & 17, and May 22 & 24. From these 5 days of trading, I executed 9 trades totaled. Among these 9 trades, there were only 3 wins (33%) and 6 losses (66%).

Biggest winner and loser

Among the 3 winning trades, my biggest winner was the (SEPR) trade that I did on May 18, yielding a good 4.14% gain. My biggest loser was the (SPSN) trade on May 22, which I lost -1.59%.

Fixed Principal vs. R-Factor

This month, I also started keeping track of 2 different approaches when I tried to price my size per trade.

The first approach is what I called the $5k approach. I based all trades out of $5000 principal. (i.e. if Share XYZ is $500/share, I will just buy 10 shares.) I am fully aware that this approach is NOT going to win me anything in real life. I’m applying this approach just so that I can gauge the accuracy of my observation on different setups, as well as to track the number of winning and losing trades. This method is not too much about winning amount. Anyway, under this $5k approach, my result for this month is +$185.70. However, this is before trade commissions of $189.81 (@ $9.99 1-way). Therefore my $5k approach would have only yielded me a -$4.11. Shockingly, at only 33% win-rate, I still managed to break-even after commissions.

My other approach is the more commonly used R-factor approach that I learned from the Traders in the Blogging community. Under the R-factor approach, when I set my R to $100.00, my performance was +$55.75 after commissions. And if I set my R to $150.00, my performance for May would yield +$173.53 after commissions.

Summary

Overall, my trade performance in May was totally unacceptable. I would only give myself a grade of D. I made some very poor decisions based on absolutely nothing but unproven speculations/anticipations. I was lucky not to loose big only because of my (SEPR) trade (I almost want to take it out of my calculations so that the statistics . Otherwise, I don’t think a winning rate of 33% would end up with so little damage.

I hope that I will get back to more trading for June. I am desperately in need for many more practices. However, the fact that I didn’t have much opportunities to trade in May, had painted a very good realistic picture of what just might happen in real life! So what if I can profit $x per day from ‘closet trading’ at work? If my work schedule doesn’t even allow me to trade, $x multiply by zero days is still zero! This is totally something that I need to keep in mind.