* updated 01/01/2015
Here are my grade summaries, which I started using in March 2012. The numbers are winners, losers, third number is breakeven.
2012 totals: 101-27-3 grade B- for the year
2013 totals: 120-20-0 grade B- for the year
2014 totals: 390-69-4 grade C+ for the year
My minor update at the end of 2014 is that I did a lot
more trades as compared to previous years. I gave myself a slightly
lower grade for the year.
As for philosophy, I mostly trade options. I tend toward high probability trades, which translates into low risk, low reward. In other words, a high percentage of winners, and a small amount per win. In baseball terms, a bunt single would be my favorite kind of play. The CBOE education center (link1) is a place to learn more about options.
I'm writing most of these thoughts in August of 2012. I trade with ThinkorSwim and have my retirement account with Schwab. I invest the retirement money differently, more conservatively. In my trading account, I like to sell naked puts and naked strangles. These are often categorized as advanced, high risk strategies, because of the leverage and the possibility of huge losses. However, like I said, I tend towards high probability odds and low leverage. Once in a while I may go for a home run swing. For the big swings, I prefer to do vertical spreads vs. buying individual options.
I don't like to talk about dollar amounts. For option
traders, the cliche of risk and reward often applies. For the most part, I take small risks and get small rewards.
I aim for about 80% winners and that isn't by great timing or stock picking or analysis. The option probabilities for my trades line up at around 80% going in, and the payouts match the odds. This is in contrast to straight up or down, long or short, coin flip kind of trades, where the odds are about 50/50 going in. I look at technicals, fundamentals, sentiment and news. I like to keep my technical analysis simple, mostly looking at simple 50 day and 200 day moving averages and momentum. I like one-year Candlestick charts, and also often look at 2 year, 5 year and 2 day, 5 day charts.
Market sentiment as expressed in surveys, headlines, and Internet forum activity can be useful information. With all that is out there, it can be overwhelming to new folks. KISS (keep it simple stupid) is a useful mantra for novices. Adding complexity may only increase work and costs, if a novice hasn't yet figured out the simple.
My many years in the stock market have taught me to stay humble. Periods of profit often precede losses. I don't have a good "gut." Strong gut feelings about a trade, have often led to my biggest losers. I have learned to work with this, and the trading diary has been an extremely valuable tool. Unlike some others that I meet, I don't believe that I have any particular gift for the stock market. It has been a long and difficult road for me. I am good with numbers and like the complexity and flexibility of options. Options are not for everyone.
I like to learn new things. During the nine years I have been blogging, my trading style has changed considerably. When I started this blog, I was mostly do buy-writes (buy the stock sell the call). This blog is as much for my benefit, as it is for the readers. Even if I only pick up one or two good ideas from a webinar or live event, it can be valuable. Even novices and beginner level courses sometimes have things to teach me. Often times it is more about market sentiment, than tactics, but this kind of thing has led to some good trades.
Then there is noise. A good percentage of what is on financial TV, and that gets posted and linked on the Internet I would categorize as noise. Almost everyone has an agenda, so take everyone's comments, including mine, with a grain of salt. Sometimes these items can be useful for measuring sentiment. As for information, I always want to verify from a second independent source.
When I do the monthly posts, I report closed trades for the old-time option cycle that closes the third Friday of the month. The yearly totals are for closed trades. Any open trades will be reported next month/year.
* Standard disclaimers apply to all the above and all the content on this blog. I am not making any recommendations to buy or to sell.
Past performance is not an indicator of future results. I am not
responsible for the information in any links. Each person must do their
own due diligence before investing money.