The Journey to Self-Discovery

Success comes to people who look at markets in unique ways and don't simply follow the canned indicators and software or the predigested analyses from news reports or research reports.
Successful traders are able to see markets through a unique lens.
There's a degree of creativity that goes into success for a trader.

I will be completely honest since this is my blog. Lels.
I've been trading for almost two years.
I am negative 10% right now.
And I am not yet consistently profitable.
I've made a lot of mistakes along the way.
And I still keep on making some of them.

I think that in order to be a consistently profitable trader,
one must be fully aware of who he is, what he can and cannot do.
He must know his strengths and weaknesses.
Do more of what works.
Eliminate what doesn't.

But when you're just starting to trade, how are you supposed to know that, right?
You're a noob and you have no idea what you're doing.
It would be awesome if you have a market wizard sitting right beside you in every trade.

But that doesn't just happen to anyone.

When I started trading, I kept a trading journal.
Why did I have a trading journal even when I was just starting?
I needed a record of my trades for me to look back and see what I did wrong.

I write lots of things on my journal.
Entries, exits, reasons why I bought, reasons why I sold, etc.
But of all those things, the most important to keep track of is my trading psychology.

Here are a few entries from my journal and what I've learned from them:

"Now I want to get out of RCI to buy DAVIN because it's a weekly breakout but I would lose 3,000+ pesos by cutting my losses because I can't get out at a decent price. NEVER EVER EVER buy ILLIQUID stocks! This is your Nth time getting stuck on an illiquid. Learn your lesson."

"I shouldn't have sold everything when it went ceiling just like I did in MED because my base is REALLY LOW so corrections wouldn't scare me. What happened in NOW lost me a possible 2x bagger."

"Almost bought 7k shares RFM at 4.18-4.20 but was able to cancel it telling myself that the reward is only 9.52% max and I will ONLY take trades with at least 10% reward."

"I really think that making more money by averaging up is more important than not averaging up and keeping my base just to show off a 90-100% gain screenshot."

"Reasons why I was hesitant to buy more DAVIN:
My average price will increase and the % gain will decrease.
I can no longer post a 50%+ gain which hurts my ego.
But I have to understand and keep telling myself that making more money is more important than bragging about higher % gains."

"I realized that I have a hard time monitoring more than 3 stocks. I'm not comfortable. I think I should focus on just 3 stocks and control my fear-of-missing out just like what happened this week. I jumped from DAVIN to POPI to DAVIN again to ION. It's costing me commission and small losses that compound into big amounts."

"This is another impact of my fomo, just lost almost 8% of my account equity in one day. i should REALLY NEVER CHASE."

"I have to fight feeling sad/down whenever my winning stock goes down or my unrealized profit on a stock goes down."

"DO NOT TRADE OR ANALYZE if you are sick. You will make dumb decisions."

"Nothing wrong with the stock/candle/trend. 15% gain instead of 70%+."

"Although I could've exited at 0.75 yesterday to reduce the loss. It took me longer to accept that I'm wrong."

I read my trading journal every weekend to find out how I did.
Then, it's study, study, study!
Reverse engineer. reverse engineer, reverse engineer my most successful trades.
Focus on what succeeds.
What trades make money?
Why were they successful?
How did I come up with the idea?
How did I enter the trade?
How did I manage the trade?
How did I exit?
Reverse engineer the trade.
It not only taught me my strengths,
It also taught me what is working and that I should do more of what I'm doing well.

As I went through this painstaking, mind-numbing, soul-crushing task, I was able to find out what works for me and what doesn't:

• I don't have the courage to take on bounce plays.
• I don't have the patience to be a trend follower.
• I don't have the time for day trading.
• I easily get scared when things happen fast.
• I have a problem in scaling up on positions.
• My fear of missing out is very strong.
• Trend lines don't make sense to me.
• I can only handle 3 positions simultaneously.
• I know what stock is about to go up but I don't have the patience to let the trade work.
• I get better results when I wait for the close.
• I find buying breakouts easier.
• I perform poorly when I assume/predict.
• I lose money when I chase.
• Illiquids suck.
• Many of my bad trades are impulsive trades.

Through these realizations, I have developed a strategy that works with my temperament, with my time commitment, and just makes sense to me on so many levels.

These are my trading rules.

It's from trading book authors, podcasts, articles, youtube videos, blogs, and myself.

I have them as my desktop background so I get reminded every single moment.

Before I make a trading decision, I make sure that I am well aware of how I feel.
That I am aware of my trading rules because these rules saved my ass lots of times already.
But it doesn't always happen every time.
Sometimes I immediately buy/sell a stock and end up losing money.
But whenever I can, I try to be as disciplined as possible.
Sometimes I close my eyes and talk to myself first to check if I might be missing something.

I think that it is important to figure out your best practices as a trader.
Once you understand your best practices, you can create a checklist.
And you can use that checklist just like a pilot goes through a checklist before taking flight to make sure that everything is perfect with the plane.

Co-Pilot Checklist

1. Don't touch anything.

2. Keep your mouth shut.

Make sure everything is perfect with the set-ups, with your frame of mind before risking capital.

Many of my bad trades are impulsive trades.
They're not planned.
They're not well thought out.
I was fearful of missing a move.
I was frustrated because my last trade was a loser and I want to get the money back.
These impulsive decisions rarely gave me positive returns.
So by requiring myself to go back to basics, to best practices, and use a checklist,
I am sure that I'm making the best bets and not impulsive ones.

It took me quite a long time to have some confidence in my analyses and the trades I take.

Someone who has a high degree of confidence without prior success is probably delusional.
Genuine confidence is earned and it is earned through successful experience.

Every trade offers a lesson.

Every win offers a lesson.

Every loss offers a lesson.

Keeping a Trade Journal is Hard, But it's Worth it

Ever since I started trading, I've been keeping track of my trades.

Although I have no idea what I'm doing, I have a list of what stocks I bought and sold.

I remember that my first trade was BDO simply because that's where I deposited the money for opening my COL account and because Henry Sy owns it and there are a lot of BDO branches.

I think I bought it at 88.00 and then sold it after only a day at 87.00. 

I didn't like it.

And on my first trade, I already knew that these blue chips suck.

Seriously.

My first basura trade was MARC on April 25, 2014 (just about a week after opening my account). News came out that it was suspended.

Bought it at 3.77, sold it at 3.90.

I was clueless.

Just looking at the bid/ask and waiting for comments on a thread.

My first profit in the stock market was based on pure damn luck.

And so I went on like that.

Just recording the ticker symbol, what price I bought when, and what price I sold when.

Then I realized that I need more than buy and sell prices.

So I added new columns like what indicator I used, what set-up it was, and others.

I tried to fill every cell for every trade every day.

It was tiring.

And over time, you'd certainly lose interest doing it especially if you are smacked with losing streaks.

"Does this really matter? This doesn't change anything. Just writing prices, dates, indicators. I'm still losing. I might as well stop this. I'm wasting my time."

But I kept going.

I had a firm belief that someday, doing this would pay off.

I kept going.

As I did, the things I recorded changed as I went on.

Some columns were deemed useless and got deleted.

While some were given more attention.

It took more than a year before the things I wrote started to make sense.

I caught a glimpse of a bigger picture.

I thought I was writing about stocks.

I was wrong.

I was writing about myself.

The image above is what my trading journal looked like on the last quarter of 2015.

This is my performance for the last 97 trades I did in 2015:

Turned out, for the second half (almost) of 2015, the chances of breaking even on my trades is higher than winning them, while losing 55% of the time. Aside from that, I am only able to follow 1 out of 3 trading plans that I formulate.

The question is, WHY?

I'd get to that later. For now, here's what my current trading journal looks like:

And here's my performance, so far:

Out of 39 trades, my win rate almost doubled and I barely breakeven although my fail rate increased by 5%. I have followed the plan 60% of the time which is twice as successful since last year.

The next post is the best part of keeping a trading journal.

"Self-discovery"

2.50%

I saw that the Gentlemen Bastards is offering a mentorship program.

It's free and it won't be like the Zeefreaks batches where there is a subastahan. 

I think there will be no monetary exchange and anyone can apply.

But only a select few will be chosen.

I saw their posts and I was ecstatic.

Every single cell of the trader in me was pumped with adrenaline.

Because I am a big fan of the ZeeFreaks tribe. I've read the blog inside out.

I've been reading the blog since November 2014 and I've incorporated the Zeus Strike and Alignment of the Stars into my system. Aside from that, I have read the blogs of all the tribe members that I know of and follow every single one of them. I study how and why they get into certain trades.

I have to join the program.

This may just be a once in a lifetime chance.

I need to get in.

So I sent them a message.

Talk about intro.

After a while, they replied and said that they'll let me know once they have decided on the screening.

I waited..

Then there was a registration form.

At first I was so excited that I filled up the form immediately but when I got to the part where you were asked to share your stock market story, I stopped and told myself that filling up this part needs more time. The next question was where I have to sell myself. So I closed the form and decided I'll just fill it up by the weekend so I can think of better answers. That's just the kind of person I am. I like to take things smoothly, think about it, and plan when I can.

Before I went to sleep that night, I was thinking of my answers. I was thinking while taking a bath. I was thinking about it on my commute to work. Heck, I was thinking about it while working. I even made a Word document of my answers so I can revise it whenever a better idea comes to mind. Imagine how eager I was.

When I finished the document and was ready to paste it to the original form provided by the bastards:

HOLY F*CKING SH*T !!!

They said that the form automatically closes at midnight of February 7, why is it closed?

Midnight of February 7 is the next minute after 11:59PM of February 7, right?

Then I realized.. when 12:00AM strikes, that's February 8..

I messed up.

I was so frustrated with myself.

But this isn't assuming that if I was able to submit the form, I would've been chosen.

Only 10 people were selected out of 400.

That's a 2.50% chance.

And 2.50% is not zero.

I feel so depressed and heavyhearted even until now..

Reality broke me into pieces.

I just missed something that might change my life.

Something that may be the only thing missing.

It's like losing something yet you don't understand..

But once you've withstood the pain and overcome it, you will gain a heart that is stronger than everything else. Yes. A Fullmetal heart.

A Second Chance

"Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending." - Carl Bard

No. This is not a movie review.

They say that the market is merciless. It does not care about you. It does not forgive.
I strongly agree. Except on the forgiving part.

Remember the SMC trade that I ruined because of my impatience?

Well I got back in.

And this time, I think I did it right.

I bought SMC when it broke out of 60.00. I was there.
The breakout was screaming straight to my face.
I didn't hesitate.

And I was forgiven for my past mistakes.

I think the market forgives. But only if you forgive yourself first.
Because only then can you move on and keep pushing.

"Enduring and forgiving are two different things. You must not forget the unjustness of society. As a human being, you must hold the event in contempt. Yet, you must endure. You must put an end to the chain of hatred." - Scar's Master