2023 review with data
Planning ahead for the New Year
“Nothing in this book is known to be true. It’s a reflection on what I’ve noticed- not facts so much as thoughts.
Some ideas may resonate, others may not. A few may awaken an inner knowing you forgot you had. Use what’s helpful. Let go of the rest.
Each of these moments is an invitation to further inquiry; looking deeper, zooming out, or in. Opening new possibilities of being”
The above excerpt is taken from Rick Rubin’s “The Creative Act: A Way of Being”. I devoured this book over the holidays and it has left a lasting impression on me. This one quote succinctly frames some of the key messages I have been trying to convey in this Substack. My words are a reflection of my experiences. They are a way of perceiving my inner voice and giving it full awareness. It may not be the truth or the “right” method so question it. However, hopefully, it sparks something within you to take into your trading to be better.
Inspired by his short form, I thought I would try something different in this post. I published a Tweet thread about my 2023 trading review with data. I recycle this with some further insights. My hope is it inspires you to do your own reflection and goal-setting. From this, I will open up further collaboration via the chat available here. I would love to see Traders posting their 2024 goals and reaching out to find their own networks.
I didn’t make seven figures…again. However, it was a strong year of growth and I am genuinely happy.
Some general observations, what went well, what didn’t work, and areas to target going forth. These concepts may help you with your trading this year.
5 general observations from the year:
You can’t control the opportunity set: this year was a tale of two halves. My results were not linear. There was certainly a period post Earnings season when the market became increasingly difficult in a rising rate environment. We sold off and then it became choppy from March onwards; the small caps completely dried up; macro dominated versus stock specific; less money came into the market and pockets of strength were reduced. However, as a catalyst-specific trader, my performance really should be judged versus the underlying catalysts and opportunities. It is all about how you play the cards that you are dealt. It always comes but it can be lumpy.
The best trades have multiple variables: the key is understanding what the market actually cares about. The stronger the variables, the more the market needs to take action. There is a clear see-it moment that lights up and you just know it’s on. The best trades go from the start. As trader Dante said: “Know what you want to see, where you want to see it, and when you want to see it.” For me, examples that illustrated this point were SYR on breaking news, SIG fade post the gap up, WHC on resumption post deal, and PLS on the gap down playbook amongst others. If it felt hard to get stock, then that’s the sweet spot.
You are responsible for your results: stop blaming the market. Stop worrying about what other traders are doing or calling out. Only when I fully let go of external pressures, cut distractions, and doubled down on my best self that I saw results. No doubt this coincided with market improvement but I executed better. I surrounded myself with people that brought me energy. All that matters is the quality of my work, my attitude, and the focus I bring. Working hard to me means building and reviewing stats, play-booking best trades, writing my report card, optimising systems, creating tech hacks, implementing new rules to change habit patterns, re-watching tape, researching, and deep reading. It is NOT sitting there looking for something to trade.
Learn from mistakes: you can choose to embrace losses or ignore them. It can be a painful exercise reflecting on our own fallibility. Sometimes a trade is a bad beat. Sometimes it is a clear mistake. The beauty of short-term trading is you get multiple reps. Use this to improve your edge and move forward. I took a hit shorting BBN which was a valuable insight for my overnight model. I lost fading WC8 as stock came out from the deal which was a sign of real subsequent strength. I bought SYR 1hr post the very top as “down too much” in a pure act of complacency. I lost punting PLS overnight several times on a lithium move which informed me that there are just too many moving parts overnight for this trade. Heed it and treat it as a learning lesson to be better.
Collaboration not competition: my biggest winning trades came from collaborating with my team. Building a solid network of talented professionals is the best thing you can do. Some view this as competition and possible edge erosion but the true secret sauce is actually in how you apply yourself and execute real time. It is way more fun sharing the journey and the success of others. I like to see the best in people. Be guarded within reason but once you have built trust, let it flow.
5 Things that went well:
Improvements in my systematic Overnights: I spent alot of time improving this strategy given the difficult conditions in 2022. Why would something re-rate and why does the market care? I have built an edge independent of overnight market moves which works for me. As a generalisation, an individual stock move can broken down as follows: 50% market, 25% sector, 25% individual stock-specific fundamentals. Let that sink in. As you go to bed at night in Australia, 75% of your overnight position is completely random (I work with the assumption you do not know how the overnight session will trade).
Risk management goal: I experienced several blowout losses in 22 > $20k so this was a focused goal. I only had one major loss of -$15k. To hit my goal I used stop loss automation; hit out in full; hedged overnights; my risk desk stopped me out on my 2 blowout days. Changing the habit pattern and being comfortable accepting the loss is the most important part.
Trade selection: my FILTER was way better in the second half. Doing less and doing it better. I was more conscious of variables, better-defined rules for each playbook, and questioned what is edge versus crowded. For the first 6 months: 47% win rate, 881 trades, P/L X vs 2nd half win rate 52%, 628 trades, P/L 2X.
Collaboration with new pod: I sent a daily email review and built a Slack room with new colleagues. Great insights and collective results. They greatly improved my tech stack which is a skill I lack. Thus, I changed my routines and patterns to let go of distractions. I cut things bringing me low energy and low edge. I doubled down on this new team.
Launching the new Substack: the hardest thing to do is just start. Writing this has helped my clarity and awareness in real time. It is a practice of focus and deep work which translates. I am meeting new and interesting people. I am building my network organically. I have a deeper sense of purpose. Welcome.
3 Things that did not work:
Overtrading non-playbook junk: this is a hindsight tag but my commonalities were not doing the prep work; reacting to a move or a chatroom callout without processing; straying outside of my lane e.g. specs; trading setups that have not been tested and have no statistical edge e.g. vwap; not waiting for MY setup. I wrote this up previously here: https://baytrading.substack.com/p/the-overtrade.
Sizing goal: not making more in the best intra plays. I did not implement exponential betting on the best hands. I did not put up many > $20k scores. There was a problem with my mindset where I became more cautious given the market conditions and lost in March/April. I didn’t treat the future trades as independent events. I never fully re-programmed my brain to take on sizing versus my default habit patterns. Change is hard unless addressed with consistency.
Discretionary overnights: despite leaps in systematic overnights, I still succumbed to residual holds overnight on "feel" or weak catalysts. -$77k here. The reality is offshore market and sector moves do not care for your feel or chart setup. These get punished.
What I need to do next :
Analyse Overtrades and the commonalities: what are the triggers for me? Is this just a pattern I have no edge in? Is this a time of day I have no edge in? Is this unplanned? From here I can build better systems to safeguard.
Study my outsize intra-winners for the year: what did I miss vs peers? What size did I hit vs available? Were there clear spots on the chart I could have pressed for my system? Can I truly scale with data to prove?
Split out Morning drive vs Intraday trend trade: get quant team help here. Understand what defines a trend trade vs just a morning drive.
Conclusions and goals to target for 2024:
-Increased sizing in intra-strategies
-Increased selectivity
-Double down on best practices
I will expand upon this with specifics in next post