Sunday, May 9, 2010

2nd Anniversary!

As of today (May 9th 2010) my blog has become 2 years old. It’s been a long journey for me, and to celebrate my blog’s 2nd birthday I’ve decided to tell you about my trading career.

Before I get started I feel I should first explain some of my history leading up to the point of where I decided to become a trader. In high school I played ice-hockey, and had been planning on becoming a pro however those plans fell through during the end of 2003 once I started going out for Junior B teams. I had run into politics before, but at that level it got bad so we moved to Breckenridge, Colorado. I played for the summit high school team and a travel team in Vail, but wound up outright quitting hockey in February 2004. I had started skiing that winter, and got a job at a ski shop. The next fall/winter I got a job at a ski resort (which is also where I am working at on the weekends now), but I wasn’t really going anywhere. I wound up quitting the resort job, and only working the next 1 or 2 winters at the ski shop (though I had a short time working at a Holiday Inn). The reason I quit was because we had moved to Leadville, CO and the drive was too much to have 2 jobs at once.

So eventually I wind up quitting my job at the ski shop, and nearing the end of high school I started to think about where I was heading. Though it would be a good fit for me I didn’t want to join the military because of a few reasons the main one being that I don’t support what America stands for today. If it was 30 or more years ago I may well have signed up, but not now. I also didn’t really want to go to college mainly because I had no clue what I wanted to study. About the only thing I was remotely interested in was business (either running my own or managing one). One day my dad asks me why don’t I try trading stocks? He had tried it back in the 90’s unsuccessfully, however he told me because of that he at least knew what not to do and I could learn the rest as I went maybe even finding a mentor along the way. He said he would give me the capital to get started, and I could try it for a few years to see if it liked it. If I didn’t I was young enough I could still go to college for something I did like. I wound up taking him up on his offer, and I started with about $2,500-$5,000. I had to learn almost everything from web sites because my dad’s line of work has been in the computer industry (he is a network engineer/project manger for AT&T) so he could only tell me as much as he knew from when he tried it. I eventually developed a strategy trading earnings releases.

What I would do is wake up at about 5amMST (7amEST), and start by going down the list of companies with earnings releases coming out the next day. I would make a list, narrow it down to a few, and then decide which one was the best trade. I would then place the trade through TD Ameritrade’s command center. My stop loss was -2.5%, and my take profit was 5%. I would also exit the trade after about an hour or 2 after making my entry. I did not know it at the time, but my style of trading/research was fundamental analysis with almost no technical analysis. The results were mediocre at best, but this likely had more to do with me being a lazy teenager then the strategy itself. I would make my dad so frustrated with me because I wouldn’t take notes, or even make a spreadsheet without a good kick in the butt. Personally I don’t know how he could have put up with me, but he did and I’m thankful for it :).

A few more months pass by and I find this trading software called Visual Trader. We look it over and compare it to other companies’ trading programs, and decide to buy it. Once we get everything set up I begin learning the program, and by it I learned about indicators and timeframes. I also learned about the different types of charts there are, trend lines, and support/resistance levels. Eventually I wind up no longer trading my earnings strategy, but instead trying to find either the perfect indicator or combination of indicators to make money. If I didn’t know any better I would swear I ran though every indicator known to man and almost every way you could combine them.

After a while of swing trading I had discovered this thing called day trading. However the capital needed was so high because of the pattern day trading rule ($25,000 minimum in your account at all times) that I couldn’t do it. One day my dad announces to me that he was getting a loan to consolidate this debt, and the loan would be a lot more then what he actually needed. So we put the money aside for when I would be ready to day trade, because I still needed to learn the ins and outs of day trading. I eventually came up with something that worked on paper so we went for it. Once I made my first few trades I knew day trading was for me, just something about it I liked way more then swing trading and investing. So I quit swing trading, and dive into day trading. At first it worked ok, but then I started to loose money. So I tried coming up with something different, which would work at first but shortly after I started trading it for real it also didn't work. I went through I don’t know how many strategies, each with the same result. Some of this you may be able to see in my blog because I had started it around this time.

During my hunt for a working strategy the company who I received my data feed from (eSignal) sent me an ad in the mail for a free trading seminar in Boulder, CO. We (my dad and I) decided to go to it, and though a good portion of the stuff they explained I already knew I still came out with one thing. This “nugget of gold” was something I had started to do from the beginning, but didn’t have a full comprehension of. It was something called “risk management”, and so began my transition from complete amateur to professional trader. My trading had improved slightly, and I had started using another trading program now called Stock Finer (at the time it was called “blocks”). Using this new software I had come up with a strategy I named “The 10k Strategy”, and thought I finally found what I was looking for. I traded this for a while, but it eventually wasn’t really working. This time though I noticed that the strategy worked, but only in certain situations. So I make another strategy called “MA Trading”, and continue day trading stocks. I still ran into the problem of it working for a while then loosing money. I also was starting to not like trading. All I was getting was stress and disappointment from it, and was starting to think that I should do something else. However, I managed to pull myself together and push on.

Around this time is when I was looking into other ways of trading. I was always curious about futures, options, and forex trading. I looked into options some, but quickly discovered that they weren’t for me. I skimmed the surface of futures trading, but that didn’t really spark my interest. Looking into forex I stumbled onto this guy called orionmachine, and watching some of his videos made me even more interested in currency trading. So I signed up for a game account with Oanda, and began to experiment with forex. I quickly fell in love with it, and within just a few months I had some money in a new account with Oanda. I started small with about $4,000 and was doing pretty well over the course of a month or two. I found myself drifting away from stock trading and more into currency trading, so I eventually took all the money out of my account with TD Ameritrade and put it into my forex account. The main reason I made the switch to forex trading completely was it’s simplicity. There are just a very small fraction of currency pairs vs. the almost innumerable number of stocks. You also have less “Joes” who trade their retirement account so they have something to talk about at the office. It also has a certain appeal when it comes to the fact that not only is a trader a rare person to run into on the street, but a currency trader is even more rare (unless of course you live in a city that has a large financial industry). Eventually I reach the point to where I am now trading nothing on my charts except for trend/support/resistance lines. I still continue to love this line of work. Though it does get bumpy at times, I like it enough to stay with it especially after all the time and effort I’ve put into it.

Looking toward the future I see myself averaging 3% or more per week (though I’m to the point now as long as I’m making money I don’t really care), eventually being able to pay off all of my parents’ debt (I am currently debt free), and maybe one day I will be helping people with their own personal finances (not trading but rather how to get out of and stay away from debt). Aside from that I wouldn’t mind being a decent guitar player, and a semi-pro photographer. Though outside of my career path my ultimate goal is to please God, find a wife, and be at peace no matter what happens in life.

I hope you enjoyed my story, and if you have any comments please feel free to post them.

4 comments:

FX said...

Happy anniversary my trading friend. I enjoyed reading your story very much.

StockHunter said...

Thanks! I'm glad you liked it!

Day Trading Fool said...

Hi - I just ran across your blog thru the 'next blog' link. Very interesting and I enjoyed reading your anniversary post.

I am documenting my own trading journey here. I only trade stocks and I think you are way ahead of me in the profit department, but thought you might be interested in checking it out.

Best of luck next week - exciting to see a relatively new trader making money. I'll read some more. =)

StockHunter said...

Glad to hear you enjoyed it!

I like your blog, you can tell you're a better writer then I am :). As you already know from reading my anniversary post I started my career with stocks. If you go back in my blog to about march of 2009 and before I have my old stock trades posted. I also still have some of my old stock trading strategies posted on the right under "My strategies".

And good luck to you also, hopefully we will both have good posts at the end of the week :).