Trading journal – 10th December 2020

The remaining contract I had in January copper I closed out. I have 1 in March copper and put a stop just under the overnight low (3.4500) at 3.4480. Market price is currently 3.4580. It has been a great run. I’m really happy at the moment.

Still have a short position in the USD index. That’s not going anywhere at the moment, might have come back to test the level but it’s hard to read.


Trading journal – 30th November 2020

I can’t remember having a run like this as has happened in copper. It’s now my biggest winner ever, unrealised at the moment and I’ve been moving my stops up as we go. Just such a relentlessly strong market. I think my previous best was about 35k and this is already at 55k USD. My stops are set at the equivalent of 50k profit.

I realised I was at an inflection point in my decision making about 40k USD thinking this is great and happy with the gain but had FOMO about missing out on a massive winner should the trend keep going. I remember on one of my last big winners about how much more dramatic and life changing and powerful it was to let your profits run especially if you were adding to the trade as it continued higher, to really just not be attached to your in the money gains.

Another learning episode probably more particularly about my personality was that always forcing myself to choose the absolute outcome rather than finding a way to compromise or integrate the two solutions has been really powerful. I think for me that is because it allows you to stay in the game whilst also managing your risk which helps manage your emotions. So by ostensibly locking in my profits with a stop order, I’ve agreed to give up some of the upside as the volatility increases but it’s much easier to leave the position open to run higher because I feel like I’ve got some guaranteed profits as you mean the market does not gap around my stop too far.

The thought also occurred to me that as my position gets bigger and bigger the distance of my stock from the current market price will necessarily need to become smaller and smaller to manage my risk to the same dollar value which almost guarantees that I’m more likely to get stopped out as the market goes higher because of my sensitivity to the absolute dollar loss. So for example if the market rate is 1% when I only have one lot on then I can quite comfortably lose $1,000 or so and I’ve more or less accepted that’s just a cost of doing the trade wear as if I take the same 1% loss now with 6 contracts that my last will be closer to $7k which is a bit more stomach churning.

1 model I have not looked at is adding contracts up to a certain point for example 5 and then keeping my stop distance constant from that point which might perhaps allow the trade to run further instead of mechanically increasing it the whole time.

I also had another positive thought process the other day involving compromise which was again related to how much I am comfortable to lose or watch fall back to 0. I think if I had an amount of 6 or $7,000 then I will probably be willing to let that fall back to 0 but an amount of $20,000 for example was something that I would definitely want to hold on to even if it means giving up some of the unknown upside. I think for me it’s just too hard to deal with the long periods inactive and unprofitable trades waiting for a really big one like this one when I can get some still meaningful results taking profit if my account doubles for example or at least setting the minimum stop around that level.

So say for example if my in the money profit was approaching $20,000 then I might protect $15,000 of that by placing stop orders equivalent to that level in my unrealized gain. I think that was a compromising found useful the other day both wave being at peace with just $15,000 instead of 20 as well as still taking some risk on the upside should I keep on going. So I reduce my risk from $20,000 to $5,000. too many times I have watched a similar amount if I break back to 0 just because I was waiting for the really really really big one which might be mentally sound but for me it was emotionally unacceptable given my current level of wealth.

So I suppose the summary phrase would be: your head makes the plan which your heart then needs to follow. Sometimes we only find out that our heart doesn’t want to follow in the moment and I guess that’s when we lose more than we expect.

Trading journal – 22 November 2020

My gold position reversed and netted out for zero gain.

I went long copper at 2.95, then added 3.05, then again at 3.12 and 3.22. Going well so far but reaching the 5 year high, so likely some resistance around here and the contract roll due.

The thought which has been circulating in my head is that when I roll the contract the variable PnL which is unrealised will become realised and the daily price fluctuations will start to show a loss. So I need to either be committed to a specific loss amount or move my stop up significantly. Just not an ideal time in the trend to get out. I suppose if the trend is strong then the stop shouldn’t need to be too far away from the spot market price.

If the price then dropped back a long way it would be hard to hold on anyway so I think the best decision from here is to roll the contracts and move the stop up.

Trading journal- 7th August 2020

Currently I’m still just on my 1 contract starting position in gold and it’s been good, I’m up about 25k USD on this one trade but I was reflecting on what the results would have been of I had pyramided into the trade every 3% (worked out from my previous two most successful trades on cocoa and coffee) as the number that would have kept me in the game. The difference between the two means I would have made about 111k USD by now, which is obviously significantly more but I would have been really worried about when to take profit because the gains were so strong. The issue pyramiding creates is worry about getting stopped out of the bigger move and questions about where to get off. My previous answers to this question were increase by 1 contract every 3% and stop out if the price drops below the 40 DMA or entry price (or initial stop if the trade was never added to).

The benefit of staying with the inital position is I can sit on it so easily and in another way I need to sit on it so it encourages the right behaviour for capturing a trend. Pyramiding actually creates the opposite behaviours to those required for staying on the trend. I’ll be interested to see how my rules mentioned above would have played out in this circumstance but my goal for this trade is just to sit on the initial position and coach myself to success by doing that. Reinforcing the behaviour and thoughts which will allow me to sit on my initial position until the end of the trend. Have I defined the end of the trend? No. Certainly the 200 DMA would be a marker but I think I’d be disappointed if price came all the way back there and I hadn’t taken profit sooner so I think my market will be something a bit higher such as the 40-day moving average.

I think at this point in my trading the main focus is always stick to the original plan and if the original plan was bad then make a note for the next trade.

So far it has still been a great result and appropriate for where I am at. One of the main mistakes I have previously made is failing to put a context around the result and comparison to the unknown optimal outcome (retro-fitting decisions).

It is also a question of how the change in emotional stability from having a larger position with tighter stop would have prompted me to take my prophets earlier and so change the calculation for the comparison between different outcomes.

I’ve also noticed it is so much easier to coach yourself if you remain with the original plan because either way you have only one thing to change which is the plan for next time. Whereas if you change the plan and then you change your decisions as you are executing then you’ve got question marks about yourself on whether you can follow through on a plan and whether you can be successful. If you follow the original plan every time then all you’ve got to do is get better at making plans.