November 2021 Trading Review

November 2021 Trading Review

Throughout November I continued to work on myself and on my trading.

I still had a bunch of psychological challenges to overcome, therefore my trading was erratic and I continued to increase my drawdown. My last relative drawdown figure is -2.75%.

After reaching this new low I decided to switch to demo account for some time and focus on making more intelligent trade decisions by studying the market.

Because throughout most of the November it seemed that I was still searching for the holy grail and trying to upgrade the strategies I was given by my mentor. I still ignored the possibility that the problem was in me, not in the strategies :)

But then I started reading a book "Way of the Turtle" by Curtis Faith. It was written by a very successful and intelligent trader who started his trading career in the 1980s. In the book he showed (mathematically and statistically) how overoptimisation actually leads to lower probability that the historical results will play out in the future. It doesn't mean that optimisation cannot be done, but if you do it improperly (like I was doing) then most certainly it is like shooting myself in the foot. And that's what I experienced in my trading results.

Another important point mentioned in the book was that a true expert doesn't need rigid rules. Because he has an understanding of how the market works. While a pseudo-expert tries to copy the true expert by writing rigid rules (which leads to overoptimisation and consistent losses). Funnily, I was always thinking why my FX mentor is so relaxed and seems to have just a few rules. Whenever I asked him a very specific question, he would answer: "ok you can do it this way, but you can also do it that and that way". Having spent years in the retail education arena (which is filled with copycat pseudo-experts) I was always left puzzled: "how come he can trade like this and be so successful". And I'd go on writing rigid rules to myself, trying to copy his thinking. Instead of seeking a true understanding of how the market works.

So this book finally put an end to my search of Holy Grail. My attempts were proved to be useless by scientific data. My ego died. Oh god, finally! It saved me months of trying, haha.

What's even more interesting - at first I received this book in Lithuanian (my native language) in a physical format by a successful trader who was also managing a brokerage company. It was almost 10 years ago, when I was studying in university and we were working in a group to solve a business problem for that brokerage company. He gifted me that book. I don't know why me exactly, because there were other students in the group as well. I never met him again. I just know that now he lives in Cyprus and works in another brokerage company. And at the time I read just a small chunk of that book. It seemed to be too boring and complicated for me. But this time read it in English as a PDF and it gave me insights that I needed precisely at that time. I am forever grateful for the guy who gifted me the book!

So after this I decided to get back to the original strategies of my mentor and work diligently to gain a deeper understanding of the market. Initially I did some historical chart reading and was surprised to see that with the correct understanding the methods appeared to be more lucrative than I thought. So, again, that was a confirmation that the problem was in me and in my chart reading ability.

I understood that there's never a single truth in the markets. In the past I'd try to ignore the negative factors I was seeing in the charts. My ego wanted to believe in a single-sided truth and to prove itself right.

Now when I get a trading signal I evaluate all the positive and negative factors I'm seeing on the chart. I'm looking at both sides of truth. Having no negatives is a rare case, but if I have just 1 negative and 5 positives, I know that I can enter such a trade. My decisions then are well thought through, I feel confident and calm no matter if the trade turns out to be a winning one or a losing one. In professional trading, quality of decision is never judged by the outcome but by the reasons this decision was made.

So now, when I'm journaling the trades, I write down all of the reasons why I entered that trade. It's hard to gamble this way, because I know I won't have anything to write in my journal! "Reason 1: gamble", haha! And to remove the leftover temptations, I made a rule to myself that if I make a violation of my trading plan and don't correct it soon (i.e. sitting in the trade wishing and praying that things will go well) - my punishment is to stop live trading and spend 2 days (at least) in demo account. Demo account is my prison, haha! And the only way to get out of the prison is to trade according to the plan for 2 days consistently.

I really had to learn to enjoy the process and stop judging, condemning and forgiving myself for my mistakes. God never forgives because God never condemns. It's impossible to forgive if you didn't condemn. So why condemn in the first place? If I get rid of condemnations, I can finally become calm and start enjoying the process. Source of enjoyment is inside of me, not in the markets. I know I can enjoy the process no matter what the outcome in my P/L is.

I was very needy and put so many expectations on how much the market has to give me. I wrote all of those projections for 15 years to the future. This dependency on results lead to seeing my profitable trades evaporate into losses. Or into taking unviable trades which had too many negative factors against me. Just for the sake of doing something.

But who I am to put expectations on the market? I control my actions, but the market controls the outcomes. I know, I've heard this in theory for 100 times, but the key is to actually adopt this belief and live by it! Gosh, how weird I was!

Live by the ego, die by the ego... I removed expectations to make profits and told myself: I don't care if I make money or not. I care about executing the process and enjoying it along the way. Because if I don't enjoy the process, what's the point in doing it?

Yes I often found myself fearful of not making profits and going bankrupt. Because it happened to me in other business ventures for multiple times already. But what do samurais do? Before going to the battle, they already treat themselves as dead. They don't care if they die or not, they only care about doing the best that they can.

So I said to myself: "I don't care if I face a financial or physical death again. I'm already dead. So go on and win!"

This, I believe, set me free to be myself and to enjoy the process.

Today was an inspiring day because I followed my trading plan and closed the day with profit. I had one big winner, 2 small losses and 2 break-even trades.

Yes it wasn't perfect and I still had some unhelpful emotions creeping in, and my ego still wants to enjoy the profits, but hey... It's all learning :) The desire to be perfect from Day 1 is also driven by the ego. So I can forget such a desire. The key is to be consistently profitable, and that's the first step. And all the lessons I need to learn will come up naturally. They always do.

I'm happy to have experienced all the challenges anyway. It made me stronger, more resilient, and brought me closer to success. We experience minor setbacks for major comebacks.

P.S. It started to snow here a few days ago. How beautiful it is. We're waiting for Christmas!

Thanks for reading.