2 Year Plan (2017)

This post is picking up from a broader post I wrote on my private blog so unfortunately, you won't be able to read it. However I will happily share the gist of it here; I was a little low, mainly due to the time of year (family stuff). While over the long-term I was feeling a little uninspired about my future direction. I have since set myself some new goals/systems to follow and feel far more motivated.

The setting of these new personal goals/systems felt most empowering so it seemed like a good idea to repeat the process here in regards to my trading/investing, even if this process just means reaffirming old goals I've neglected or forgotten.

quick update

At the end of 2016, I mentioned that I felt that my actions in the market were now probably better described as Long-Term Trading / Short-Term Investing and this is very much the vein in which I wish to continue.

The act of changing my trading timeframe has been most liberating because it has suddenly freed me from three internal pressures.

1. Time: Trading longer-term you have more time to do your job correctly (plan trades, manage them and record them correctly). 
2. Hope: When trading short-term you forever flirt with the hope that your actions may produce an income. Longer-term you simply can't believe in this lie, so don't have the internal psychological pressure of false hope. 
3. Expectations: Very much linked to "Hope" but deserves its own category.  When trading short term you expect to be making more trades and hence more returns. This is extremely unhelpful because this produces expectations that are very hard to live up to.  Trading once a month the most you can hope for in your wildest dreams is a 2-3% return and that's only if it is traded perfectly and does exactly what your plan predicted on the upside. This is still a big return to live up to but nothing like the 6-trade-per-day day trader who could be looking at 4-5% a day in "hoped for" profits.

the long-term goal/system

I like all those on the trading courses I've attended have my coach's words rattling in my head. To paraphrase he said something like: "if you can make small consistent gains with limited drawdowns and document your progress correctly, I will help find you capital".

Now I don't think for a moment that this will happen for me because he will probably have retired by the time I'm anywhere near achieving his statement.  But the idea is a good one; trading/investing successfully is extremely difficult, so why are we all trying to see how high we can piss up the wall when hitting the toilet bowl is all that is required?

Now to be fair I have been following my plan, but I have noticed a drift in direction and purpose. This is interesting because it links to an article I read the other day. Its premise was: systems are better than goals. It reasoned that a goal for most of the time is in a failure state and that feels pretty bad to most people. And I would agree with this entirely.

So my goal displayed in a very broad system would be: plan my trade, trade my plan, manage my trade, record my trade, build my numbers up and learn my KPIs so they can tell me what I need to work on.

Good quality data is invaluable, data doesn't care about "winners" or "losers" it only cares about accurately recorded numbers.  And because I've recorded my numbers correctly I know that my hit rate is currently 39% and due to some terribly managed trades, due to not letting my profits run, my expectancy is 0.1%, but there's my work! If I'm taking 20 trades a year I should be expecting to make 2% a year.  In a year I want to improve my trade management and hopefully push this to around 4% and I know this is possible because when I average out my gross MFE I'm hitting 1.87%. Hopefully in my second year, I can push a little further, eventually, the dream would be 15%+ PA.

In order to achieve this goal, I will need a daily and weekly system in place but I'll save that for another day.