At the end of your trading cycle (daily, weekly, monthly...), is your success/failure based on absolute gain (x dollars) or percentage?
I ask because another thread on sizing got me thinking. I started trading spontaneously looking for an absolute return relative to my last job's income. It was a way to justify to myself that I didn't need to find a job for the last 8 years of my expected working life, particularly when 2020 and covid dropped on us all and made finding work nearly impossible.
Lucky for me, multiples circumstances led me to earn that year almost as much as I would have in 8 years at my last job. It was like winning the lottery.
But, as I've written before, 2021 is a year of realizations, the most important of which is, 2021 isn't going to be 2020, and the future may be more like 2021 than 2020. Sizing becomes really important, in trading and in life choices as well.
I'm a risk taker, and to some of you, probably a vey foolish risk taker. But a life of taking risk is what brought me where I am today, and I wouldn't change much of it. I just want to nudge the odds of winning in my favor, which also includes not losing it all.
In 2020, I traded expensive stocks (AMZN, TSLA, NVDA,..) in 100s of shares at a time. I very seldom looking at what % of my funds I was trading, as long as I was consistently earning my daily goal. In early 2021, as the market turned or flattened, it's became impossible to stick to my plan and I had to readjust. Mostly I had to learn about wtf I was doing and, most importantly to me, I had to discover what was exciting about trading and what I dreaded most. Short, mid, long term strategies, scalping, buying the dip or the momentum, reading the charts... I've spent 6 months trying this and that and still doing it to this day to find my trading bliss.
One thing that has stuck though is looking for absolute gains over %, almost like a psychological barrier. I used to make my expected gains in 1 or 2, at most 3 trades. It's all about sizing, right? I just didn't pay much attention to the size. Share price went up $5, I sold and went to bed. Good day's work. The trading tension was placing the bet, I mean the buy, then selling $x above purchase price. These were at most day(s) trades.
I experience the same "stress" trading $1k as I do $100k, because my thought process is the same, except for making $100 from a 10% rise on a $10 stock is disappointing to me. While I could buy 10000 shares, I expect the size my lot would wake up the algos and send the share price into a unnecessary mini frenzy...
The % return on investment from a trade doesn't satisfy me like reaching my daily gains, but I'm not sure that in 2021 I can continue to think that way.
Sorry for the rambling...
I ask because another thread on sizing got me thinking. I started trading spontaneously looking for an absolute return relative to my last job's income. It was a way to justify to myself that I didn't need to find a job for the last 8 years of my expected working life, particularly when 2020 and covid dropped on us all and made finding work nearly impossible.
Lucky for me, multiples circumstances led me to earn that year almost as much as I would have in 8 years at my last job. It was like winning the lottery.
But, as I've written before, 2021 is a year of realizations, the most important of which is, 2021 isn't going to be 2020, and the future may be more like 2021 than 2020. Sizing becomes really important, in trading and in life choices as well.
I'm a risk taker, and to some of you, probably a vey foolish risk taker. But a life of taking risk is what brought me where I am today, and I wouldn't change much of it. I just want to nudge the odds of winning in my favor, which also includes not losing it all.
In 2020, I traded expensive stocks (AMZN, TSLA, NVDA,..) in 100s of shares at a time. I very seldom looking at what % of my funds I was trading, as long as I was consistently earning my daily goal. In early 2021, as the market turned or flattened, it's became impossible to stick to my plan and I had to readjust. Mostly I had to learn about wtf I was doing and, most importantly to me, I had to discover what was exciting about trading and what I dreaded most. Short, mid, long term strategies, scalping, buying the dip or the momentum, reading the charts... I've spent 6 months trying this and that and still doing it to this day to find my trading bliss.
One thing that has stuck though is looking for absolute gains over %, almost like a psychological barrier. I used to make my expected gains in 1 or 2, at most 3 trades. It's all about sizing, right? I just didn't pay much attention to the size. Share price went up $5, I sold and went to bed. Good day's work. The trading tension was placing the bet, I mean the buy, then selling $x above purchase price. These were at most day(s) trades.
I experience the same "stress" trading $1k as I do $100k, because my thought process is the same, except for making $100 from a 10% rise on a $10 stock is disappointing to me. While I could buy 10000 shares, I expect the size my lot would wake up the algos and send the share price into a unnecessary mini frenzy...
The % return on investment from a trade doesn't satisfy me like reaching my daily gains, but I'm not sure that in 2021 I can continue to think that way.
Sorry for the rambling...
