Feb 28

My trading grade hit Zero.

My trading grade hit Zero.

Most people would look at the statement “my trading grade hit zero” and come up with entirely different conclusions. One friend looked at my face and summed it up perfectly by saying “I have no idea what that means but I’m very happy for you”

Traders on this stream would probably come up with the conclusion that zero means no progress and that my trading system sucks. So if I can take a moment of your time and explain what “zero trading grade” means to me.

One fateful May in 2013, I had the bright idea that I was going to make my fortune playing options. I managed to double, then half my trading capital all in one week. Admittedly I could have used the excuse that I was in Las Vegas and that casinos don’t build nice buildings because gamblers win. What I discovered is that I did not like losing money, as I have to work hard with long hours to make it in the first place. I don’t really like blowing money and having nothing to show for it. I made a decision to take what was left of my account and learn to trade profitably, knowing that if I did this wrong I would lose it all.

I signed up on Twitter and stock twits and set about learning how to trade by asking questions. One problem with asking questions is you don’t know what or whom to ask. So I listened and watched and slowly but surely I found out which books to read and who was knowledgeable, who was a service and who was a scammer.

My search led me to the Van Tharpe system of position sizing. This in turn made me invest in “The Traders Journal spreadsheet. The theory being” if you can track it you can measure it, if you can measure it you can fix it”. So around November of 2013 I started tracking my trades and watched my mistakes eat my capital. Initially I managed to trade flat, but as I started making mistakes my trading grade along with my capital started to take a big hit. I was learning to risk manage but still made mistakes. The “Trading journal spreadsheet” calculates trading grades on a scale of -6 to +6. 0 is not good not bad. 2 is a tradable system and 6 is the Holy Grail.

Around this time I stumbled upon the “ Alpha Capture Blog” by Jon Boorman. What impressed me most was he told his readers the day before a trade. I was embarrassed about my lack of knowledge so I was hesitant to ask Jon questions in how he arrived at some of his conclusions. I studied Jon’s blog diligently. I read it every day. I tried to deconstruct everything he did and subsequently arrived at the system I use. Slowly but surely I got more disciplined with my trading and learnt to trust my system. I started to take the signals when they presented themselves. Finally I plucked up the courage to tweet Jon and to ask him very specific questions. He encouraged me to plan my trades properly, follow a process and to do this blog.

The blog did two very important things for my trading. It made me accountable to my viewing public. (Initially a grand total of one, me) and It forced me to plan and articulate my trades from entry to management to exit. The facts of my trading were clearly articulated with the results in front of me. These facts assisted me in cleaning up my system and helped me become made a more disciplined trader.

My trading has gone from wandering around the deep recesses of hell and being completely clueless, to consistent, manageable, less stressful, better planned and with much improved results. My grade has improved from horrible to zero in about 18 months. I plan to keep my discipline, improve my trading further, become more knowledgeable and ultimately, which is the reason we trade, to make money.

I hope by sharing my experiences through my blog, I will be able to help others in making a difference in their lives. Perhaps I will be able to help my readers and followers (now numbering 140) to trade better, make a few $$, share some knowledge and have a few laughs along the way.

So with much embarrassment and just a spot of pride I am happy to announce that my trading grade is Zero.

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