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.