Episode IV: Fill in the blank

      Back at it again folks. I'm going to continue to giving my responses/thoughts on the questions posed in Episode III's video. Unfortunately I am still too uneducated on some of these topics to discuss or lay out my thoughts so I will simply leave them blank with some notes to my future self. Next up!

Money management Criteria

      I don't watch this guy’s videos (I might in the near future) so I'm not real sure what he is talking about here. Will have to dig deeper into this subject. 

Strategy Monitoring Plan

      He talks about "How are you going to know that your strategy stops performing in the manner that it’s supposed to." Some things he says he might look at are: Ave. Win/Loss Ratio, Ave. Profit/Loss etc. My questions is when and how often are you going to take of look at these performance measures? After every trade? Every week? Monthly? I can't see it being helpful after every trade knowing that one trade doesn't determine whether you are successful or not. Also is this a quick think that you can accomplish or is this more like a "Lets step back and do a full analysis of my performance" kind of thing. Plus is this process the same every time? Again all this is over my head at this point so I'll put this on pause until I can speak knowledgeably on the subject. 

Strategy Adjustment Plan

     I have most of the same concerns and thoughts about this because it’s so similar. As he says in the video I think it’s important to not change the strategy unless all signs are pointing to do so. Again a few bad trades doesn't mean your entire strategy is wrong and should only adjust strategy when absolutely sure it has a fault.

Trading Software/Budget

      I think this is going to be pretty important. Your tools of your trade almost always have a large impact on your performance in any career field. I have looked at some platforms and there are a bunch of factors that play into which one will fit me and my needs. As for my budget, I guess he is referring how the monthly fees will factor into my budget and my profit margin. In addition to can I afford to pay for these services while I may not be making a profit right off the start. 

What broker will you use?

      For some reason I thought that depending on the trading software/platform you chose dictated which broker you would work with. I guess that's not quite true. I also wonder about other tools that might be out there to increase my potential success. Lots to learn!

Will you add money?

      My initial answer to this is yes. As I don't currently have a ton of money to invest with in the first place I see myself continuing to save and put that money in my brokerage account. I know is has some issues so I will have to recognize them and mitigate as much as possible. 

Will you reinvest profits?

      Yes, at least at first. Again I don't have a huge lump of cash as we speak. I would like to reinvest until I meet a goal that I will set before I start trading. For example say its $10k. I will reinvest all profits until my trading account contains $30k. Then from then on I will remove all profits I make each month. This way I will always begin the month with the same $30k not risking my entire account each month. I think this makes sense however it’s again something I'll have to educate myself on. 

Can you support yourself?

      I don't plan to quit my job so yes I can. I also am going into this with the knowledge that this money is EXTRA MONEY that I do not need to pay the bills. This is important because there is no pressure to make money trading.  

Starting Balance

      This is a big question mark for me right now mainly because I don't know what is sufficient to be successful. It also heavily depends on me saving this initial money up over the coming months. Easier said than done. Finally I know there's a lot of restrictions, mainly minimum starting balances, when it comes to opening up brokerage accounts that I must meet. For now I'll leave this unanswered but know I'm no money bags. 

      So there ya go. It’s clear I have a lot of work to do on these questions. Lots of them were left half answered and the others were ignored. I'm not completely confident that this is a complete set of topics that need to be addressed but it’s definitely a good start. I'll start tackling each one in the coming weeks.  

Tomorrow is hump day ... 

-RJL

*CAUTION* 

      The author of this blog is inept in the writing of the English language. He has no clue what he is doing and is sorry for the run on sentences, countless typos, horrific sentence structure, lack of vocabulary, blatant misuses of pronunciation and overall suck. He doesn't proofread and is too embarrassed to ask others to do it for him. He offers his sincerest apologies for your bleeding eyes. 

 *CAUTION*

Episode III: Think it Through

      Evening. Today I found a video on YouTube that speaks about what you need to think about and consider while developing a Trade Plan. I have no clue who this guy is, what his background is or what kind of education he has but he does bring up some good points to mull over. Here is the video which I recommend watching as the speaker discusses each point briefly followed by my short response/thoughts on the first couple points.

Why Trading?
      This seems like a simple question. MONEY. If you’re not doing this for the cash you’re a nerd. Truly that is my motivation in stepping into the world of trading. It seems arrogant of me to say that however it’s the truth. I am a civil servant and I did not volunteer for the money. I stepped up to serve proudly which I still do today and every day. ‘Merica. However, that doesn't mean I don't want money so that I can live comfortably. A little (or a lot) of extra money in my savings account, retirement account and pocket wouldn't hurt.
      Having said that I know there are plenty of ways to make money other that on the stock market. Here's my reasoning behind my attempt at trading for extra cash off the top of my head. It is flexible around my work schedule which is huge. It’s a skill I can acquire right here at my computer at my own pace. It’s a skill that will be useful for my entire life. It’s interesting to me (big one). It’s a challenge. It’s directly in my hands whether I am successful or not.

What do you Hope to Gain?
      As he says in the video this rolls into my previous answer. The answer is MONEY. No shame here. It’s why I'm here.

What Separates You?
      I've told you before that I'm not the sharpest tool in the shed. I am a little OCD and my thoroughness when I attack new challenges is second to none. It’s my drive to be prepared in every way that separates me for those who just throw money in the market on hunches and feelings. Being unprepared to me is one of the worst feelings you can have in my opinion and I'll do anything to avoid it. You can guarantee that I'll put my time in learning the skills I need to be successful in the high stakes world of trading.

What are your weaknesses?
      All of them. Yeah this one is tough because I am so new to trading. I'm not good at anything as of yet but just you wait.

What is your plan to address your weaknesses?
      Episode I talks all about my master plan to become successful and eliminate my weaknesses. For now it’s all about obtaining the knowledge required and developing the skills to be a master trader.

How much time do you have to devote to trading?
      This one is tough for me. I have at times a very unpredictable life schedule. It’s one of the reasons I believe trading is a valid option to make money because it too is flexible. Having said that I believe I can spend 1-2 hours a day on my trading during the week.

What is your style of trading?
      I talked about this in Episode II. I will be swing trading based on the amount of time I have.

What markets will trade?
      I do not have the answer to this question as of yet. I am not knowledgeable enough on each market to truly understand the pro's and cons of each and which is the right market for me. I'll have to come back to this.
      Side note: He mentions 24 hour markets during this part of the video and I have never heard of that. Will have to do some research.

What is your Time Management Plan?
      This is also somewhat hard for me to hash out at this point as I don't yet know what all goes into the trading process. This will be a work in progress but for now I will follow his rough example.

      00-30 min: Review the day’s news
      31-60 min: Review trades I'm currently in or completed trades
      61-100 min: Research new possible trades
      101-120 min: Execute new trades

Rough but it’s a start. I will expand and adjust as I learn and refine my own process.

What is your entry criteria? /What is your exit criteria?
      Pass ... I dunno.

      Alright first 10 down. I'll tackle the second 10 tomorrow. Feeling like this is more of a confidence exercise to make sure you have actually thought through what you’re getting into. Fine with me. Till tomorrow.

-RJL

*CAUTION* 

      The author of this blog is inept in the writing of the English language. He has no clue what he is doing and is sorry for the run on sentences, countless typos, horrific sentence structure, lack of vocabulary, blatant misuses of pronunciation and overall suck. He doesn't proofread and is too embarrassed to ask others to do it for him. He offers his sincerest apologies for your bleeding eyes. 

 *CAUTION*

Episode II: Don't Speak Worthless Words

      Hola. I want to get something off my chest. I have been doing research for about 2 hours now on stock trading strategies which I know isn't a lot of time but one thing is bugging the shit out of me. Vague rhetoric. You know all of them, say them with me ... Buy low-sell high, minimize risk, cut losses quickly, no plan is a recipe for disaster, trade emotionless, know your limits, and they go on. This is frustrating because this type of talk, verbiage, and rambling is completely worthless. Never has this type of advice ever actually helped anyone become a better, more knowledgeable trader. I'm a straight forward type of guy and like it given to me straight, no chaser. 

      However, I was taught at a young age to not complain unless you have a solution to the problem. So I will take these lemons and turn them in to your mama’s homemade lemonade. Each vomit of words regularly spoken above points me to a topic that I will need to dive into, destroy, dissect, learn, become an expert on and implement into my trading plan/strategy. I know they are eluding to some important ideas and I’ll touch on each in future posts.

      Phhew, I feel much better now. Let’s get to work. When I sat down at my computer this morning I had flash backs to a time where I was trying to learn how to fly. Airplanes that is. There were several clear moments early on in my career that I realized I was so uneducated on the subjects we were learning that I didn't even know what questions I needed to be asking my instructors. Simply put, I didn't know what I didn't know. I can tell you it’s a feeling of helplessness, panic, vulnerability, and pure stupidity. Man this sucks, I wish I was a genius. 

     To get around this rut is fairly simple luckily. Google. The ultimate knowledge database. Half of it its information likely wrong so it’s our mission to sort through what will help us get to the end goal. The plan as I've said too many times now is to make a plan. Problem is I don't know how to do that. So I started with a simple search "How to develop a Trade Strategy".  

A long time later ...

      Here are some questions I'm going to tackle for my Trade Strategy/Plan in no particular order:

1. Day trade or Swing trade?

      This article breaks down the two vaguely:  

http://www.investopedia.com/articles/active-trading/052815/pros-cons-day-trading-vs-swing-trading.asp

      Trading Days Summary: day trading is making a bunch of trades throughout the day, it’s a full time job, you can make lots of money or lose lots of money and is stressful. Swing trading is making trades that last multiple days or weeks, it doesn't require you to monitor it all day, you can make money or lose money, and is less stressful. 

      This one seems pretty straight forward to me. I have a full time job that I won’t be quitting any time soon so I'll be focusing on swing trading. Done. 

2. What will I trade? (stocks, FOREX, options, currencies, etc.)

      I'm going to skip this one for now. I need to do a lot more research. I believe how much money I'll be starting my brokerage account with will drive the answer to this question. 

3. How much risk am I willing to accept? (Dang I hate the sound of that)

      I'll dive into this subject another time as well. It’s one of the vague subjects I talked about above.  

4. What are my goals?

      This makes sense to me. I've always believed you need to have goals in life. They determine your purpose and what you strive for. I need to find some good guidance on what kind of goals are realistic and achievable. It will be important that these are written down with my Trade Plan and are very clear and specific. 

5. Set enter/exit rules.

      This is the concept that you would not enter into a trade unless you meet the rules you have created in the Trade Plan. If the situation doesn't meet your predetermined rules you don't make that trade. Simple. I've also seen people refer to a checklist they complete before each trade. I like the checklist concept (I'm in the aviation career field) and will try to make one myself. As for what the rules would be, or what the checklist would have on it, I have no clue. Add it to the list of stuff I don't know.  

6. Keep extensive records of your performance.

      Hence, the blog ... for now this is what I will use to keep track of my journey. However I know this subject is much more involved when I start trading. Super generally I'll be keeping track of each trade and all the details surrounding it that made me think it’s a winner. What contributed to me getting into the trade and out etc. I believe there are some slick tools online that will help me with this process but I'm still a ways form placing my first paper trade.

7. Mental Approach/Emotions. 

      This seems like a weird topic to tackle but several articles have mentioned it. Most recommend you even add it into your written Trade Plan which tells me I need to take a closer look.

8. Post Trade Analysis.

       I think this will be just as important as the actual Trade Plan I will develop. I'll need to create a very detailed was to judge my performance after each trade is complete. It will need to be quick, efficient, non-bias and consistent. As for how all that would work I don't know yet. 

9. Trade Process. 

      This ties into the entry/exit rules but is at a larger scale. I'll need to develop a system on how to approach my trading. Right now I'm so naive that I wouldn't know the first step but again I think being consistent with my processes will eliminate stupid errors and increase efficiency. The more efficient I am the less time I spend on this and the more money I make. I like to think my time is precious.

In my head a trade process might sound like: 

• Asses personal state
• Am I mentally in the game? Any personal issues that might affect my performance and decision making?
• Am I physically ready? Food? Water? Sleep?

• Set-up desk/workstation
• Review news of the day 
• Review portfolio
• Analyze current trades still in-progress
• Search for possible new trades
• Run checklist on new possibilities
• Execute new trades

All these questions come roughly from this article:

http://www.investopedia.com/articles/trading/04/042104.asp

It’s an ok read. I mostly used it as a stepping stone for ideas. 

Alright. Enough for now. Got a lot of avenues to explore over the next few days.

-RJL

*CAUTION* 

     The author of this blog is inept in the writing of the English language. He has no clue what he is doing and is sorry for the run on sentences, countless typos, horrific sentence structure, lack of vocabulary, blatant misuses of pronunciation and overall suck. He doesn't proofread and is too embarrassed to ask others to do it for him. He offers his sincerest apologies for your bleeding eyes. 

 *CAUTION*