New Trader journal

Discussion in 'Journals' started by gdf, Sep 3, 2003.

  1. gdf


    Real newbie. I just started a free paper account on Wealth Lab ( and will use this journal to keep track of myself and, hopefully, get comments from other ET members with the time/inclination to do so.

    I have not yet developed a low risk trading plan so I won't be trading for real. However, I want to evaluate my psychology during trading and that's why I'm starting to paper trade right away. I'm doing Van Tharp's Peak Performance Course (PPC), I'm studying options, and I will be taking a Technical Analysis Course, and reading several other books as well (Market Wizards, Trade Your Way to Financial Freedom, Getting Started in Futures, etc...)

    I've been given a $100,000.00 account to start. I will use a 1% position size and risk 20% of my equity. I will try to be fully invested within 2 weeks. I will try to trade in 3 independant markets or sectors. I've got a lot to learn.

    Looking at the rough long term technicals (rough - since that's the extent of my knowledge of technicals so far), yesterday I bought to open: 500 shares Lucent (LU) at market, 18 shares Symantec (SYMC) at market.

    As per Van Tharp's PPC, I'll make notes on my thinking for each day's trades.

    I feel that the market is definitely in an uptrend now and want to ride this. My first mistake is that I didn't enter a stop limit at the time of my two orders. The stop limits will be: LU stop @ 1.80, SYMC stop @ 53. I basically set it at 10% below purchase by looking at the average volatility of the line. Both these are tech stocks. Lucent took a hammering and a lot of people still follow this stock. I'm sure a lot are still holding it even after losing about 90% (myself included) :( This would seem to me to indicate that it could be very volatile and I could ride it up or jump off if it comes down again. Symantec is the leader in the virus business and, like real life security firms, I believe that it will continue to uptrend.

    Today, 3 Sept, I put in after market order to buy 20 shares of Unilever N V (UN) at market with a stop at $50.00. It closed at 56.44 today. The intra-day high/lows are very tight but the daily/weekly has more up/downs with an overall up trend (must be a technical term for this behaviour). Unilever's "...principal activity is to supply consumer goods in foods, household care and personal product categories.", which diversifies my portfolio somewhat.
  2. gdf,

    It sounds like you're starting to build a solid foundation for trading. It's so important to trade off of a solid foundation.

    Just keep an open mind, while weeding out many things. And always continue to learn.

    Wish you the best,
  3. gdf


    Continuing to learn.

    While developing the attached spreadsheat, I realized that I made a mistake with the position sizing. I just used $1000 per position to figure out how many stocks to purchase before. The correct way is to take my max position size for a stock ($1000) and divide this by the difference between my entry/stop prices. E.g. buy LU @1.99 and stop at $1.80. Therefore, max shares in position = 1000 / (1.99-1.80) = 5263 shares. Does this make sense?

    Therefore, I'm going to increase my # of shares to come up to max shares allowed. I'm not fully invested yet, however, I also realized that if I max out all positions in terms of number of shares, I'll most probably be fully invested ($100,000) but won't be able to reach my full 20% at risk. e.g. I'll be risking only $15000 instead of 20,000. This seems to be good at first, but I feel that I'm foregoing potential returns because of this. Any thoughts?

    Also, at the far right of my spreadsheet, you'll see my returns (Since purchase, per day since purchase, and annualized). How do I add up these columns to get a total return for each column? Is it with a weighted average using the amount invested in each stock?

    Thanks for any help
  4. gdf


    I read somewhere, and believe to be true, that a total of about 15-20 stocks in three independant sectors/markets will give you adequate diversification in your portfolio. Comments? I'll go with this for now. My three sectors will be technology, consumer non-cyclical, and healthcare (as broken down at

    As I stand, I therefore have 2 tech (LU, SYMC) and 1 Consumer non-cyc (UN).

    I will also limit to $5000 in any single position in order to get to 20 different positions (20 x 5000 = 100,000), as opposed to holding the max 1R position size in terms of number of stock for each position.
  5. fan27


    The only way to evaluate your psychology during trading is to trade with real money. Paper trading can be useful if done properly, but its use is not to test if you are going to be able to pull the trigger after 8 losses in a row. Or if you are going to be hitting anything that moves in an attempt to recoup the mornings losses.

    I am not discouraging you from paper trading, but it is not going to give you any indication of how you will react when real money is on the line.

    Good Luck
  6. gdf


    Point taken. Thanks for the input
  7. Yes.
    Post your revised spreadsheet after these changes.
  8. dbanks


    I believe you will need to use the acutal amounts and then average as you have done with the other averages.
  9. Hi gdf,

    Eventually the day will come when you will trade with real money...

    When that day arrives...will you be trading with 100k???

    If there a reason why you don't want to paper trade via the same amount you'll actually be trading with???

    My point is'll react differently to the market when trading a 1million or 100k or 10k trading account...

    especially when your new to trading.

    Good luck with your realtime simulator trades.

  10. gdf


    Here it is. Thanks for the comments.

    When I start trading with real money, I'll be starting out with only about $30,000 in order to test my future system. I'll probably also start with even smaller ( < 1%) position sizes at the beginning. I'll then slowly ramp up the amount of equity that I'll trade when I've gained enough confidence. You're probably right that most people react differently depending on the amount they trade. However, from what I'm reading from Van Tharp et al, ideally this shouldn't be the case. Again, from what I'm reading (and which I believe), if I do my homework properly, then I should trade from the same frame of mind regardless of $ amount being traded. Homework = getting handle on my trading psychology/self-awareness, learning technical/fundamental analysis, gathering data on markets, deciding on market(s) to trade, developing a positive expectancy system, testing/modifying/paper-trading the system, actual trading, monitoring/reviewing trades...phew!!
    I realize this is a lot of work, but the other option is give my money to others to take care of. I've already done this and it is a disaster. At any rate, I'm really enjoying the learning and I have a feeling I'll really enjoy the trading.

    Thanks for having cared enough to post your comments. That's another thing that I like about this whole trading world. The sympathy/empathy/caring that mahny other traders seem to have toward other traders (especially experience traders toward inexperienced traders). I see it here at ET and I see it at the mastermind forum at

    #10     Sep 6, 2003