End of month review

Closing thoughts into holidays

Intro:

It is that time of year to wind up and enjoy the great Australian summer holiday. Pack up the car, overflow it with kids’ gear, drive south in a straight line for 3 hours, and then turn left to reach the destination. Before I shut down, I wanted to share my end of month review process and some reflections.

My monthly review is a staple. I have been doing it for years and it is probably the most important tool to address any short-term issues and keep me on track. I gave an insight into this in my "Overtrade" post previously and my solutions to rectify it:  https://baytrading.substack.com/p/the-overtrade. How many times do you set a big-picture goal and it just falls by the wayside? To me, you have to break the goal down into chunks and check in regularly to gauge how you are tracking. No doubt we were blessed with some quality catalysts in December but I did a much better job of staying in my lane and checking any complacency. There is still some lingering marginal stuff in there which is frustrating e.g. IEL trade. I will now address this in my next goal. Ultimately, I want to trend towards increased selectivity, increased quality, and increased size.

The Substack:

As I reflect on the month, a standout has been writing this substack. I have really enjoyed the medium and I think it is helping my trading by being accountable and heeding my messages. No doubt there are still mistakes and such are the joys of being a discretionary trader- there always will be errors because I am human and fallible to internal impulses and a monkey mind that ravages. All I can do is minimize these to the best of my abilities by learning from experience and actually implementing them. The initial apprehension I had with writing is slowly dissipating. The reality is people just do not think about you as much as you think they do. It is all on me. If readers enjoy the content, they will keep reading and connect. If they don’t, they will jog on. The goal is to keep putting out relevant and interesting material from my front-line experiences that will resonate with the reader. That’s what I can control.

If any readers want to see my previous reviews this year, please contact me.

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The images in this post are all taken from Tradervue. I have used this product for years and simply love it. However, Tradervue does not support the Australian market and thus I had an Excel workaround built which is cumbersome but it does the trick. The good news is that the team over at Tradervue has expressed an interest in collaborating and bringing the platform to Traders Down Under. The hope is I can generate enough momentum and then they will build an API to get trade data syncing from IRESS. Give us a shout if this initially appeals to you. Lesss go.

December Review:

-Overview:

• Despite December usually being a quiet month, there were a lot of high-quality catalysts that I was able to capitalize on.

• The reality is that a strong market back into all-time highs = sentiment better and money getting put to work = setups working with follow-through intraday.

• My biggest focus was to check any Overtrading and to stay in my lane. I executed this well with full focus on my solutions. Any overtrades were mere paper cuts other than one PLS chase. An important hack here was being able to instantly identify with my emotion if the trade was FOMO. I would just cut the position straight out if I knew I had succumbed to junk with that sick feeling in my stomach. Sure it was a shame that none of my overnight systems really fired and therefore I didn’t fully capitalize on the market ramp. However, that is a different game and a different strategy. No hindsight and the most important thing was to stay in my lane.

• A major shortcoming remains sizing in those true A opportunities. The only way to tackle this is to know fully what an A setup is without hindsight! Experience alone is one thing but signals and grading in real time is a powerful additional tool. I have subsequently addressed this across my playbooks and improved my tech stack to get to that default sizing number. This was really valuable input from the pod and quant firm here.

• To that end, my one overriding goal for next month and next year is to fully increase my trade selection and sizing to the most significant opportunities. I want to trend towards increased selectivity, increased quality, and increased size. I want to do less and better maximize. I have been in this game for long enough and sizing remains a mental roadblock for me.

• A slightly frustrating end to the month not participating in NEU. This was partly due to unfortunate circumstances out of my control where I was not able to trade. However, I didn't fully do the work to capitalize on the subsequent Day 2 action. I have begun to write this one up in full as ever to close the chain.

• I want to be fully present on my holidays with the family. The only way to do this for me is to disengage from the market with no positions or exposure. I have now done this.

-What did I improve on:

• Continued the momentum with my substack. Good feedback and interest to date.

• I focused on the Overtrading goal with minimal rips. Win rate up to 65%. Completed the goal and I moved on.

• Updated grading and sizing models across my playbooks to better identify the strongest opportunities in real-time.

• Multiple trade write-ups in the most meaningful catalysts e.g. SIG; Lithium gap down playbook; PLS gap up playbook; STO; ORG.

• New algo spreadsheet integrated with Broker.

• Networking and incorporating a new trader into my team.

• Finished "Clear Thinking" by Shane Parrish.

-What do I need to do now:

• Write up NEU trade in full

• Investigate algo automation for sizing to my limits

• Goal setting and structure for 2024

-Stats:

• Win rate +64%; Profit factor 3.2.

• Biggest win: SIG +$27k; biggest loss MTS -$6.5k

• Number of overtrades 7 for -$9k loss.

P/L

Intra vs Overnight

Strategies

Gap down playbook was the meaningful contributor on 6/12/23. I did write this up in full with clear improvements in sizing and grading the opportunity set. The subsequent drift higher over multiple days is hindsight as the commodity subsequently ripped which is a different playbook. I do know key improvements are holding a core open to close particularly when I see that capitulation early. The best trades go from the start as the market is locked out. Another stand out was building on my Event-driven playbook. This requires thorough background reading, understanding true mispricing, and then trying best to block out all the meaningless variables.

-What is my goal next month:

• Increased sizing in the true A opportunities

-Solutions to hit goal:

• Define what a true A opportunity is to me based on my playbooks with clear rules, checks, risk buckets, and grading. Automate this where I can.

• Fill out my planner template in full pre-open. This is important to identify the size of the opportunity and risk that needs to be allocated to strategy.

• Visualize the no of shares I want to trade PRE-OPEN.

• Size incrementally. Start with $15k risk to stop and build

• Default algos to hit sizes and my limits.

• Max 3 ticker per time segment.

• Say NO! Be happy to pass unless truly A catalyst for my system.

• Tag my grading of the opportunity on Tradervue. Cross-reference sizing and P/L to said grading each month to see how I am tracking to said goal.