At the end of your trading cycle (daily, weekly, monthly...), is your success/failure based on absolute gain (x dollars) or percentage? I ask because another thread on sizing got me thinking. I started trading spontaneously looking for an absolute return relative to my last job's income. It was a way to justify to myself that I didn't need to find a job for the last 8 years of my expected working life, particularly when 2020 and covid dropped on us all and made finding work nearly impossible. Lucky for me, multiples circumstances led me to earn that year almost as much as I would have in 8 years at my last job. It was like winning the lottery. But, as I've written before, 2021 is a year of realizations, the most important of which is, 2021 isn't going to be 2020, and the future may be more like 2021 than 2020. Sizing becomes really important, in trading and in life choices as well. I'm a risk taker, and to some of you, probably a vey foolish risk taker. But a life of taking risk is what brought me where I am today, and I wouldn't change much of it. I just want to nudge the odds of winning in my favor, which also includes not losing it all. In 2020, I traded expensive stocks (AMZN, TSLA, NVDA,..) in 100s of shares at a time. I very seldom looking at what % of my funds I was trading, as long as I was consistently earning my daily goal. In early 2021, as the market turned or flattened, it's became impossible to stick to my plan and I had to readjust. Mostly I had to learn about wtf I was doing and, most importantly to me, I had to discover what was exciting about trading and what I dreaded most. Short, mid, long term strategies, scalping, buying the dip or the momentum, reading the charts... I've spent 6 months trying this and that and still doing it to this day to find my trading bliss. One thing that has stuck though is looking for absolute gains over %, almost like a psychological barrier. I used to make my expected gains in 1 or 2, at most 3 trades. It's all about sizing, right? I just didn't pay much attention to the size. Share price went up $5, I sold and went to bed. Good day's work. The trading tension was placing the bet, I mean the buy, then selling $x above purchase price. These were at most day(s) trades. I experience the same "stress" trading $1k as I do $100k, because my thought process is the same, except for making $100 from a 10% rise on a $10 stock is disappointing to me. While I could buy 10000 shares, I expect the size my lot would wake up the algos and send the share price into a unnecessary mini frenzy... The % return on investment from a trade doesn't satisfy me like reaching my daily gains, but I'm not sure that in 2021 I can continue to think that way. Sorry for the rambling...
I think that what is important for you is what is highest on your priority list. If you need money, then the amount of money you make is important. If you are financially in a more comfortable situation, you will maybe be more interested in the returns. I personally only watch 1 thing: did I take all the trades like they were proposed by my trading plan? If not, I can become very angry on myself. And I know that if I always follow my trade plan, there will be good profits. So just following my trade plan.
I try to detach from what I would like to make on any day, week, or month & focus only on taking my best setups with a reward-to-risk at least 3:1. About 90% of my annual profits are made from 10% of my trades - I have no control as to what calendar days these trades fall on. For me fixating on a daily profit goal is counter productive, I see it as majoring in minors. I do my trading math in basis points (same as %) as to what was risked & how much it moved my equity curve. This makes trading more focused on the the math edge over a larger number of trades than the outcome of the last few trades. One attribute losing traders have in common is a need to think they need to make a profit each & every day or week. The market provides the best opportunities every so often - what what we don't do really matters.
Depends on what you trade. I only trade indices so I look at how many points for the week I took. You compare this to the movement of the indices to work out if you did ok. For one reason or another I always miss trades or sometimes it does not look right so you stay out and the thing then moves. You are never going to get every trade but this is ok. I am looking at the DAX now and it is sideways rubbish atm so we shall wait.
Daily performance noise is a killer - look at quarterlies instead or monthlies at the most. And don't think $, only %. Large $ will hold you back from taking losses when you should. p.s. you've done amazingly well - you may want to start by looking at which strategy achieved the most for you? (scalping, swing, etc...)
Good point and yes, there are several times that I have let a stock drop to avoid taking a loss and turned the trade from day to multi weeks. Nightmare scenario, because I can't take the time pressure and also the reason I stopped swing trading as well. At this time I've mixed longer term stocks (12 months) with day trading/scalping, to keep busy and get better at reading the charts.
Make 8 years of salary in 1 is an achievement. But to know till what extend it is an achievement you should know the salary (not asking you to post it). When making $10K a year the achievement is much smaller than when making $100K a year. In both cases the statement is correct, but the achievement is noticeable different.