Satuki @ Home

I made a bit less than 500 dollars today, which is decent by my standards.  My daily goal is actually 300 dollars. Once the goal is reached, my trading is relaxed or becomes conservative. I would scale back to very tiny positions or even stop trading.

300 dollar daily target is a lot for my account size. Here is why. We have about 22 trading days a month.  Although my account rarely ends up in red at the end of each day, it does have quite a few flat days. Let’s say I have 8 flat days, 2 down days, 12 up days that have reached the daily target, $300. Then my monthly profit is around 3000.  That is 36000 per year or 72% annual gain relative to my account size.  Do you know what a 72% annual gain with no draw-downs means?   It means that it is unsustainable.  It means even the 300 dollar daily target is a big stretch for me. A more realistic target is $150. Anything more than that is a bonus.

Having said that, I must improve my profits somehow. Increasing my account size and my position size seems to be the only way. Technically, you trade a 300k account the same way as you would do with a 50k one provided that you trade liquid stocks. For example, let’s assume that I was a computer which really does not give a damn about fear and greed. I would proportionally scale up my position size. So my profits in 2009 would be over 150k. Based on the way I trade, there is probability that this result could be reproduced year over year regardless how the market behaves.  As I build my account, it would not be long to beat a brain surgeon. To be honest, this is my first goal.

However, this will remain as a theory on paper for quite a while until you can build a very strong mental fort.  The bigger your account, the stronger your fort will have to be. For me, the fort relative to my current account szie is almost impregnable. But it will perhaps crumble if I abruptly increase my account size and trade much bigger lots.  So I am taking it one step at a time. As some of you perhaps already noticed, I have slightly increased my position size.

Ok, here is a quick recap on my trading today, 12/28/2009. It could have been a much better day if I had managed my exits well in the AMZN, MED and X shorts.  Or my profits today could have exceeded 1000. But… alright no buts.  Here is the opening trade, AIG long

Click on the image to have a better view

The entry was around the open of the 4th bar and the exit around the close of the 7th bar.

 Safe trading.