Quarterly review

Reflecting back on the Big Picture

Most people don't need motivation. It’s an innate characteristic to want to better oneself. Sources of inspiration can come from internal or external forces. The fact you are reading this now is a testament to your inherent interest. However, what most people do need is clarity.

Clarity greatly assists us in defining and executing on our goals. Often, we set big objectives for the direction we want to head but we fail to break these down into small actionable habits that move us forward. As Dan Koe says,

"You don’t need motivation when the task in front of you is so stupidly simple that you can’t help but complete it."

My writing is an attempt at clarity. It is a project of self-awareness and exploration. I am determined to NOT drop the ball this year as I have in the past. Sharing the journey and the problems I am working on instigates action and greatly supports accountability.

The Big Picture

At the start of the year, I set my plan for structured goal setting. The key to this was breaking said goals into actionable chunks and checking in regularly on how I am faring against the big picture. These are my “checkpoint goals” or milestones and daily systems. Remember, you do not rise to the level of your goals, but fall to the level of your systems.

Goals are what we need to solve our problems. We grow through the process of reflection followed by action. This is a fluid process of adapting to new information but the overarching goal serves as the backbone.

Through a detailed reflection on my 2023 trading, I identified the areas I needed to work on:

• Problem 1: Sizing- I am not putting on enough size in my true A/A+ trades. I am not making enough in intra-setups, particularly Morning drives. I am not consistently making > $25k in the best opportunities.

• Problem 2: Trade selection- I am still overtrading. Specifically, this means trading setups outside my playbook and chasing a move after the fact.

I structured specifics to tackle these problem patterns. This post is a live review and assessment of these processes. Are my results and systems tracking and aligned with the big goal? Throughout I want to ask:

-What am I doing well?

-Where am I falling short?

-What am I learning?

Hopefully, this process helps the reader to go deep into their personal trading and underlying mindset. Overcome resistance by sitting down to do meaningful work—target those important levers and not the fake work of mocking up hindsight patterns after the fact.

---

Goal 1: Increase my Sizing in my intraday strategies to > $750k by the end of 2024 (liquidity adjusted)

Monthly checkpoint goals:

• Set $500k default sizing (liquidity adjusted) for the “Morning Drive” playbook based on grading: Complete. This has been developed and now expanded for the Gap up/down playbook.

• Create an assessment table of grading, sizing, and return profiles: Complete.

• IF > 75% hit rate on sizing goal, increase size by 10%: In Progress. 69% currently for Morning drives for the Quarter.

• 5 detailed write-ups of intra setups > $25k: Complete.

• 5 intraday trades > $15k: In progress. Only 3.

Any obvious gaps or improvements:

• Where can I grow sizing in other playbooks? My EPS strategy can be scaled given the liquidity for the next-day exit rules. My current AUD target or $ max risk needs to be upgraded for rating categories. The main feedback is that grading does not do a good job of rating strongly trending stocks in this current market regime. A better solution for these stocks would be a % risk allocation based on an adverse gap the next day. The goal for these trending stocks is to de-risk rating downgrades as best I can. Other strategies are tough to scale e.g. Overnight momentum because of limited available liquidity on open. Breaking news can be scaled BUT it is case by case. The first sale is invariably a spot to add. Quality is rare.

• Stop loss automation: I cannot trade bigger unless I am also managing my risk. The key to this for my intraday strategies is stop-loss automation. We are in the final stages of testing. Enter stop in full where my trade idea is wrong. It is my stop because a break of it means it’s going to in aggregate move against me. Thus, it would make no sense for me to NOT immediately get out of everything.

• Lack of True A+ morning drives: I feel I didn't hit my goal of morning drives > $15k as there genuinely hasn't been enough quality for my system OR the market has gapped sufficiently to price the news. All we can do is trade the opportunity set. My grading identified APX short, LTR short and 29M short as the strongest opportunities in January but only LTR was liquid enough to truly swing for. I have done a good job of maximizing other playbooks outside of just the morning drive.

Daily systems:

• Be aware in real time that I need to think about sizing. Pop-up created pre-open to trigger the statement: "I need to think about sizing".

• Complete my planning spreadsheet with my playbook, grading, and sizing defaults.

• Visualize pre-open the number of shares I want to hit based on my planner via my pop-up.

• Execute via automation.

• Compile results from the planner at the end of each day.

• DRC write-up targeting "Sizing" with clear solutions.

Assess results to the big goal. Any obvious gaps or improvements:

• The biggest improvement I need to make is to be fully conscious of my sizing goal: I must re-program my default brain pattern through emphasis. I am not fully there yet. This comes by taking my pre-open check-in and visualising the number of shares I need to hit based on my spreadsheet. Be aware in real time that I need to think about sizing. There are times when I try to explain away why I can’t get to my sizing goal because of XYZ but this is invariably a self-limiting belief. Confront that inner feeling through automation. I trade my best when planned and controlled.

• P/L is a lagging indicator of processes: I feel like I am on the right path and results to date are showing. I am being consistent with my daily habits and systems.

---

Goal 2: Increase my Trade Selection to cut Overtrading. Reduce losses to < $50k

Monthly checkpoint goals:

• Tag and collate data for "planned" vs "non-planned": Complete. Specific tag "overtrade" for anything that is not graded pre-open and not in the morning spreadsheet.

• <$10k in overtrade: In progress. Jan -$9.5k; Feb -$16.8k; March -$16k.

• >75% in planned: Complete. 91% in Jan; 93%  in Feb; 93% in March.

If not then assess why Daily systems failing:

• Much better and this may NOT be the low-hanging fruit: commonalities for why I overtrade are i) I haven't planned pre-open; ii) The feeling of needing to do something after seeing a move on a chart or something on the book; iii) Impulsiveness reacting to a callout. The solution is to create a simple space between trigger and action before I can trade:

1. Have I graded? If not, grade

2. Is this no man’s land?

3. Is there RVOL?

---

Stats for the Quarter

2024 YTD

• Av Win trade 3.9k; Av losing trade -2.1k; Win rate 56.4%; Profit factor 2.4; Largest win: +$53k; Largest loss -11.2k

Best strategies:

• Strong contribution from overnight strategies e.g. EPS and momentum. Markets have changed and I have adapted.

• Other: Gap up playbook +$14k; Gap down +$7.8k

Losing strategies:

• None of my strategies are losing money.

• What is costing me money is my human fallibility. Trading setups where I have no edge e.g. overtrade. Missing stops because of a bias versus my rules and stop-loss automation being down. Trading overnight "feel" based trades vs my quant-backed overnights. Address solutions below

  

Morning drives:

• An area I specifically wanted to address. These are the only trades > $10k

  

Overtrades:

• All these can be solved by a simple check in the space between trigger and action. My 3 simple checks can cut out so much of the noise.

• Furthermore, I have added an end-of-day routine check to ensure I am only carrying playbook trades overnight. I cannot take home a position where I am showing initial Red. My timing is wrong.

Conclusion:

I am happy with the progress this quarter. The energy and focus have been on point. A big source of this has been my engaged writing. It is the foundational skill from which everything flows.

Most importantly, I remain targeted. I am doing a better job of sticking to rigid playbooks and following the respective rules that have been proven up through time.

I must guard against complacency which is my most common weakness. I tend to stray after a good run or get sloppy with my risk management. Writing at 11am and my daily report card can face up to these weaknesses and stop my trading from spiralling further in the ensuing days. It’s never enjoyable but necessary. Catching myself in the moment is the true sweet spot. Create that space between trigger and action.

I have been exploring new playbooks which are also bringing me enjoyment and new learning e.g. CTT short; DYL long; JMS long. This requires doing the reading, planning, and formulating an ongoing thesis.

There is still room for improvement with my sizing. Double down with a particular focus on the visualisation routine pre-open to re-program my default brain pattern. Seeing that number and internalising that number of shares to execute makes it so much easier to commit in real-time.

Happy. Fit. Onwards….

If you managed to make it this far and enjoyed the post, please feel free to reach out. Want to share your journey? Have a problem you need help with? Or if you just want to network, I am contactable: austin.mitchum@propex.net.au.

Thanks for reading.