It is a new year and a new start for everyone in all the aspects of life.  Never mind that 1st January is a date arbitrarily set by the R...

Recap of 2016 and Moving Forward in 2017

It is a new year and a new start for everyone in all the aspects of life. 

Never mind that 1st January is a date arbitrarily set by the Romans centuries ago to be the start of the year. Like many others, I will take this chance to look back at 2016 before moving on to more trading opportunities in 2017.

In 2017, I made around 10,000 Singapore Dollars in trading profit. Out of which, 80% is from Forex trading and the remaining 20% is from stock trading. I do not have a fixed sum set aside from trading at the start of the year. On and off I may make additional deposits if there are more opportunities present and for many months there is a high percentage of idle cash lying in the account. A rough estimation of my returns for the year will be 15%.

My returns for the year may appear modest, considering that the broad market performed so well this year. The Nasdaq was up 7.5% for the year, the S&P 500 returned 9.5% and the Dow finished the year 13.4% higher. My domestic market, the Straits Times Index, was flat for the year though. 

This positive return meant a lot to me. It has been more than 8 years (I did stop for a few years in between) since I started trading and this is my best return till date. My trading return was disastrous before 2016. If I have kept proper records of my trades, I probably have annual returns ranging from -20% to - 200%.  In January itself, my losses are close to S$10,000 and I thought 2016 will be another losing year for me.

I re-engineered my processes in the months since then and turned the losing start into my best year ever. With a bull market it is not difficult to achieve returns between 10-20%. It is the change in process that can help me achieve consistent returns in the years to come.

In this blog my posts are generally about superstocks based on Jesse Stine's book. However, it is only one of the four strategies that I trade. The four strategies I am currently trading are:
  • Superstock based on weekly scans, inspired by Jesse Stine
  • Stock breakouts on the daily chart, inspired by Mark Minervini and Jesse Livermore
  • Forex trading on the daily chart, inspired by James16 on ForexFactory
  • Pennystock trading, inspired by Timothy Sykes
I will now go though the progress and future work in 2017 for each strategy.

1) Superstock #TTDSuperStock

This is probably the reason that most of you get to know about this blog. Weeks after weeks I post on potential superstock on this blog. My trading results does not justify the effort that I put into research. In a number of instances I missed on the stock that I blogged about and missed a profitable trade, and the few stocks that I entered into resulted in losses.

This lead me to conduct a thorough review of my stock picks posted in the first half of 2016. My main issues for the strategy are my entries and exits. I do not know when to enter and exit, resulting in missed trade and holding onto losses for too long. 

In my review, I established rules that will maximise my returns for my picks made in the first half of 2016. The average return of those stocks based on the rules is 25%. Even with the positive backtesting result, I suspended my trading of superstock after I completed the review. With backtesting only, I cannot be use the entry and exit rules used to maximise my 1st half 2016 picks are applicable for future superstock picks. 

This week, I will be applying the rules that I established to forward test on the second half picks that I continued to post after suspending trading of superstocks and see if the strategy will still outperform the market. If so, I will resume trading of superstocks in the earliest time possible. I will also look into the importance of fundamental factors in affecting the performance of superstocks.

2) Stock Breakouts #TTDBreakout

This is the strategy that undergone the most changes in 2016. In fact, I have traded in many variants of breakout stocks in the past few years. At the start of the year, I attempt to follow as closely to Mark Minervini's strategy as possible using the volatility contraction pattern. Maybe I missed out on some important components of the strategy, it was just not working for me. I get fake-outs most of the time and had poor exits for the stocks I got into. This strategy was responsible for much of the loss I incurred in the disastrous January 2016.

After reading Jesse Livermore's How to Trade In Stock for the umpteen time, I made some modifications to my trading strategy. Firstly the stock must be between 1-2 average true range above the resistance when I enter. This reduces the chance of fakeout and ensure that I am not chasing a stock too far. I also used the 10MA as my stop loss level. The changes are drastic and to play it safe, I have reduced the size of each trade from S$5,000 to S$2,000.

In doing so, I have taken out most of the discretionary factors from the strategy. The only two things I need to decide are which resistance level to use, and whether the company's fundamentals are good enough. My daily scans take about 15-30 minutes each day and minimal time is required to monitor the stocks.

I do not know how good the stock is performing but my sense is that my gains are way bigger than my losses. I have started using Edgewonk to journal my trades so in 2017, I will have a clearer idea on how this strategy is working and look for ways to improve the strategy.

3) Forex Trading #TTDFx

My Forex account has grown by 128% this year. Nonetheless, there is still room for improvement as the account is more than 40% off its high. 

In 2017, I will journal down my trade using Edgewonk to look at the performance of each setup.The strategy is still very discretionary in nature I hope to establish more rules and improve the risk/reward ratio of my Forex trades. 

4) Pennystock #TTDPennyStock

This is the latest strategy I am trading. Pennystocks are highly volatile and can offer very good risk reward ratio when traded correctly. I have gone through tens of Timothy Skyes' youtube video and his free Trader Checklist video lessons before going live in October. My account is flat since I started trading this strategy despite making tonnes of mistake.

I have used Edgewonk to journal my trades since day one of using this strategy and after reviewing those trades in the coming weeks, I should be able to develop a winning strategy.

It will be a busy 2017 for me with four strategies including a brand new one. There may be changes to the format of this blog depending on the review of my superstock picks for the second half of 2016. I will continue to post my picks and learning process in this blog. 

If there is anything that you would like to find out more, do drop me a message in the comment section or through twitter.

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