One year down, nineteen more to go until I can trade for a living

Early in 2010, I discussed about my plan to [grow my trading accounts organically and eventually trade for a living][] (i.e. live and breath in the market 24/7). Now that the first whole year of my long term plan has passed, I can update my visualization table as shown. 2010 was a good year. My starting capital for 2011 is 63% more than expected. This is mostly due to the \$13,000 prize money from winning six of nine Dukascopy automated trading contests. On the contrary to my fortuitous success, I revised some of my estimations noted in the table to be even more conservative. In particular, I reduced my annual deposit to reflect real bookkeeping data in 2010 and lowered my investment yield expectation based on my performance data throughout the past 10 years of my trading. To mitigate these reductions, I expect to continue depositing funds while I receive a salaried income rather than stop mid-way as originally proposed. The effect of inflation is deliberately ignored in this table because I'm discounting its effect in my investment yield estimate rather than adding more columns. It's all guess work for now anyway. Nineteen years is indeed a long time. It is a worst case scenario assuming that I will grow my accounts organically and not do anything else. I doubt I will need that much time as there are means other than trading a personal account to achieve trading for a living. I might discuss more about this later in the year once something materialize. My focus this year is to finish developing my proprietary Java trading platform with my partner and put it to good use in the forex market. Nineteen years or not, the fact that trading for a living is even possible for a self-taught amateur such as myself is testament to these incredible times that we're living in. I fully intend to enjoy every second of it.

[grow my trading accounts organically and eventually trade for a living]:

Visualize and Grow Rich

I just read Think and Grow Rich (affiliate) for the third time last weekend. One of the key ideas presented in the book is to set realistic long term goal and stick with it every single day. This reminded me of something that I've done lately which I think is very helpful in disciplining myself in my trading. That something is this table below. This is a table of my planned deposit and return for my trading account. The table shows:

  • the amount that I plan to deposit into my trading account each year
  • the accumulated principal at the end of each year
  • the expected yield, which is based on my historical trading performance from the past 10 years of trading, minus the [couple of blowups I've had][] (which is a reason why I am starting from scratch in this table)

Estimating future values is nothing new. What I find particularly useful in this table is the fact that they show the following.

  1. My minimum savings goal for each year (deposit column). So that I can project an annual budget.
  2. Effect of compounding. A reminder that I don't need to perform exquisitely in my trading to reach my goal. This helps keep my trading expectation realistic and not over-trade.
  3. I can trade for a living after 16 years even with my conservative expectations. This is my ultimate goal.
  4. I can update this table at the end of each year with real data so that I can see where I stand with respect to my goal.

This is a simple and easy to do trading goal visualization. I visualize this table often to remind myself what I need to do. Both in terms of setting a bar above to push myself as well as limiting my expectations to realism. A problem many new traders have, myself included, is the need to perform, and in a big way (making it big in that one trade), or conversely, afraid to miss opportunities. This table helps me keep a realistic mentality just so I don't back up the truck in any particular trade. As the table clearly shows, I don't need to take unnecessary risk to reach my goal of trading for a living. What is your trading goal? What is your plan to achieve it? How do you keep yourself motivated? These are some fundamental questions that this table can be helpful in answering.

Posted 23 April 2010 in trading.

A sign that you are truly enjoying what you do

When was the last time that you were working on something and you were so immersed in it that you have forgotten about the hours that gone by? That feeling of timelessness while doing something for hours. Not the type that you're stressed and feel that you don't have enough time to do a job. I am talking about the other kind of feeling. The positive one. The feeling that is serene and content. If you know what I'm talking about, then congratulations! You have found what you're born to do. There are a handful of activities that I am passionate about. I sometimes get that zen-like feeling when I am cycling through a mountain path or snowboarding down a hill. But what I truly like to do is problem solving. In particular, I find that programming quantitative trading systems is a perfect outlet for this side of my personality. Programming is one of the few ways in which you can create something out of nothing. Very much like a composer or a poet. But unlike those trades, you can solve practical problems with just your sheer mental capacity by programming your thoughts into codes. To problem solve, you also need a source of inspiration. And what better field can there be than the capital markets. It is basically an ever-changing chess game in which you are playing against the entire world. Talk about setting a bar high. As you may have read, I've run into a few obstacles with my trading lately. I need to develop a new trading program to let me regain my edge. So I got up early this Saturday to program my new trading software. Next thing I know, it was 4pm already. It was a blissful day. And that, is my reason for wanting to trade for a living.

Posted 15 March 2010 in journal.