Keeping My Day Job – Trading 20k to 2 Million in 20 Years, One Month at a Time

Discussion in 'Journals' started by keepingmydayjob, Mar 1, 2011.

  1. Keeping My Day Job – Trading 20k to 2 Million in 20 Years, One Month at a Time

    I have no dream of day trading for a living. I have no expectation of getting rich quickly. I did harbor such desires for a long time, and I gave it the old college try.

    A few months back, upon re-reading Gary Smith’s How I Trade for a Living, I decided to stop chasing those dreams and instead to pursue a simple goal: To be profitable every month.

    That goal – to be profitable every month – is my only goal. I am not concerned with the size of the profit. I just want to trade profitably month after month. I figure I have about twenty years before I’d like to retire, and if I can be profitable month after month, I would expect that my grubstake, such as it is, should grow to a respectable amount by then.

    My trading account has a current equity of $20,007.03 as of today’s close, 3/01/2011, and I am currently in all cash.

    My approach is short-term swing trading. Most of my trades last a few days to a few weeks, with a very few (too few, I might add) stretching into months. I do put on an occasional day trade when an exceptional opportunity presents itself and I happen to be available to participate in that opportunity. However, most of my trades which become “day” trades do so simply because an intended swing trade turned tail and was stopped for a loss on the day of entry.

    I trade stocks, stock options, and futures. I do not trade options on futures.

    I usually size a stock or option trade at a 2% of capital risk. For futures, given the leverage involved and current volatility, I often have up to a 5% initial risk. If a trade requires more than a 5% bet, I sit that hand out. As my capital grows, I would like to bring my per trade risk level for all instruments down to 1% of capital.

    Should I experience a peak to trough drawdown of 30%, I will stop trading until I can replace at least half of the drawdown with money earned and saved from my day job. So,I currently have a “stop loss” on my equity of approximately $6K – should I find myself down by that amount at any time, I will stop trading until I earn and save half of the loss to refresh my equity.

    As my main concern is to be profitable every month, and as this journal is meant to document my efforts in pursuit of that goal, my plan is to update this journal at the end of each month. I will provide an end of month p/l along with a list of the positions I opened and closed during the month. I may or may not provide weekly updates. As I am not a day trader, I do not trade everyday, and indeed, I sometimes go weeks without placing a trade depending upon market conditions.

    Good trading to all,

  2. how do you come up with 30% max drawdown??? seems a bit too much. even an index doesn't often correct over 30%

    for me, on month-on-month basis, i probably don't want to lose more than what i can make in a month. if i can make 3% a month, then i don't want to lose more than 3% a month.

    i like to count p&l on weekly basis, which helps me to lower p&l volatility.
  3. Don't focus too much on the money and exactly how close you are to achieving your 2M goal, but stick to managing each trade as best as you can and you'll do better.

    Good luck!
  4. BlackBison: what strategy do you trade?? just curious
  5. Swing trading and level bounces off Daily, 4hr, 1hr chart levels. Holding time is usually anywhere from a few hours to a few days.

    I also filter the levels according to certain non-technical, non-fundamental criteria.

  6. I am trying to place daily and weekly p&l into the "mere noise" zone for me. My goal, my only real goal at this point, is to have no losing months. I have losing days, and I have losing weeks, and I have losing months. I know I cannot eliminate losing days and weeks, but I do feel that I can all but eliminate losing months.

    The Max drawdown of 30% is a personal choice made by me, and it is simply the level at which I would stop trading to reassess where I am and what I am doing. There is no time frame involved - whether a 30% drawdown is suffered during one catastrophic night or whether it is slowly bled out over six or twelve months, it is the level beyond which I will stop trading. I will not start trading again until I re-fund at least half the loss from my regular income, i.e. saving money from my day job.

    Certainly I hope never to lose that much. It would be great if I never have more than a 3% drawdown. I do not expect a 30% drawdown. However, being a small account, my risk/trade is higher than I would like for it to be. For example, stock and option trades are sized for a 2% risk. Futures day trades are sized at a 2% risk. Futures swing/position trades often have a 3%-5% risk. So a 30% drawdown, while not expected, is something for which I need to be prepared.

    As my equity increases, leveraged risk will continue to decrease. I started this account last May with $2500, and during the last twelve months I have added $7800 from my income, and the remaining $9700 has come from trading profits. When my balance was $2500, my average risk/trade was an insane 16%! My plan is to reduce risk to 1% on all bets as equity increases. For stock and option trades, the equity level for a 1% risk is $40k, and for futures swing/position trades, that equity level for a 1% risk is 100K. I obviously have a ways to go!

    At this point, in order to build my equity to sufficient levels, there is simply no choice for me but to use leverage to build my equity up until I no longer need it. This does not mean that I will stop trading leveraged instruments at that time. It does mean that while I am willing to risk 5% on a trade with a 20K account, I would not be willing, nor would I need to risk that much on one trade with a 100K account.

    Thank you for your comments,

  7. heech


    I'm sorry, is this comment a joke? I don't get the punchline.