"The road to success and the road to failure are almost exactly the same." — Colin R. Davis
You know my love for quotes; this one particularly resonates with me. I don’t feel like I’m doing much different stuff than I was doing a year ago, yet, the results are completely different.
Happy Sunday, my Friends!
I hope you all had a great week and start to the year. I know I’ve been less active on Substack this year, as this is only my third article in a month after Finding Edge and Game Theory.
If you follow me on Twitter, you know I’ve been very busy trading crypto lately. In fact, I actually almost completely recover my $50k loss from November due to FTX’s collapse. It all started with a lucky trade on $SOL where I bought 750 $SOL at an average price slightly below $10 and sold them at $23 for +$10k. Then I made $28k on $BTC through a prop firm, plus some gains on my first love, $NQ.
Before we start going into the review of January, let’s take a moment to celebrate this big milestone that makes me happier than the gains I had this year: we crossed 1,500 on Substack!! I don’t know if I’ll do something special, but if you have good ideas, drop them below. Someone I appreciate on Twitter suggested a few Apex accounts; I’ll see what I can do about that.
What would you like to celebrate?
Ok, back to work! I don’t usually post about monthly recaps, but since this is an unusual month, I’d figure I’d share my thoughts as this is a big month for me, and it’s an important step in my trading journey.
The first question I ask myself is, “why is it such a successful month?”.
What have I done differently?
I sized up.
You know my love for the kelly criterion, I shared many P&L simulations in the past, and I applied it over and over again. I’ve been risking around 5% of my prop accounts on each trade (5% of the max loss authorized to be clear), which paid off.
I know my winrate is around 60% over the last 1300ish trade, and my RR is slightly above 1, so the risk of ruin is very low.
But besides that, almost nothing! I’m trading the exact same strategy; the only difference is that I traded most of my volume on $BTC rather than $NQ. I don’t think this trend will continue going forward, but the activity on $BTC was too interesting to pass on.
I almost always have an eye on BTC, but that’s the first time I’ve been trading it. It’s quite funny because my long positions have far better results than on $NQ, and my short positions have far worst results on $NQ for the same signals. I don’t really know how to explain that besides the current market conditions that favored longs over the last few weeks.
For the record, below are the two big wins of 2023.
It clearly is an outlier month, and I don’t expect it to continue like this for the rest of the year. I’m not excited or euphoric; I knew I would have big losses and big wins when I decided to take on that journey. I’m more prudent than ever, as historically, I had my largest losses right after large winners.
My goal for the year is $80k after taxes, so I’m in a good place after only 27 days into the year. I don’t see any needs to update that goal based on just one month of data. As usual, hard to make money and easy to lose it.
What have I done the same?
A lot of things!
I don’t trade news.
I use the same trading system as before.
I don’t listen to strangers on Twitter (lol)
I still believe in myself after red days (I lose around one day out of two)
I journal every day & still record my screen.
and many more… see other articles for more information.
My best trade
I did have one large winner (and also one large loss of $4k) in Jan. Even though $BTC is up 50% or something like that, there’s always a pattern for local tops, and BTC is such a great example as it follows it quite consistently. Even though it looks scary to pull the trigger, it happens once again quite often.
Basically, the trade looks something like this on a chart.
These occasions are pretty rare, but they offer great risk rewards. I caught another one on Friday:
I have a few criteria for this strategy, and basically, I’m just waiting for Alfred to send me a signal, then I execute manually. Because of the crazy volatility, I still prefer executing manually to trusting my bot. Hopefully, I’ll find a way to overcome this soon enough, but it’s still big progress compared to last year.
Needless to say, most of my winnings came from long positions. It’s not the smartest way to make money shorting this market. All my easiest trades have been long trades except the two above. I did lose quite a bit, shorting what I thought were local tops—difficult exercise. When you look at a 1h chart of $BTC, all dips have been bought almost instantly. Shorting becomes very dangerous if the tail’s risk has been to the upside, so you’d need the perfect timing for entry and exit to be profitable. I’ve been lucky overall, and I’m reducing shorts for Feb if the ‘microstructure’ (some indicator I created to measure the strength of a market) remains unchanged.
I mean… look at that chart. Incredibly harder to short rather than long this market. Yes, it’s easy to say in hindsight. In real-time, when you see 20,200 holdings, you don’t want to short, except for scalps. Not even sure if it’s a smart move, though.
Three things out of that:
Holy shit, I’m terrible at shorting, and keep in mind my largest wins came from short positions;
Holy double shit, the long stats are incredible;
Even with this massive winner I’m still flat with shorts (well there are 6k of losses on short NQ but still, not great for btc). Don’t get fooled by large wins…
When I compare to the historical backtest, I clearly have been lucky on the long trades and unlucky on the short trades, and overall they offset each other. Funny how that works.
Anyway, I will try to trust the algo for this one and let it run on another funded account with MT5. Not sure if I’ll share anything about it. I shared financial results today for two main reasons:
I want people to realize prop firms are good overall for the industry if used correctly;
Even though I’m a small account, there are still a few thousand following me, so it’s good to show some proof that I’m not a total beginner :) Remember that your time is your most valuable asset.
Overall, reviewing all my trades, I had the following stats in Jan between my different accounts:
59% winrate;
Profit Factor = 1.5.
Note: it doesn’t include my $10k win on $SOL, as it was a swing trade, and I rarely do that; I don’t want to make my results look better than they are.
As a side note, I gained a lot of followers after posting that screenshot. Welcome everyone new, and I hope you’ll enjoy the content and my journey.
It would really mean a lot if you could share this article. One of my goals for 2023 is to have 5,000 subscribers on this Substack, and I would be grateful if you could help me grow it.
Until then, stay safe.
- Retail
PS: I had a few people reaching out to me on Twitter asking why they were not receiving my emails anymore.
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Twitter: @itsonlymoney12
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+$40,000 in January
Well done RC! Thanks for another inspiring article.
Excellent article, enjoyed it much. What a start to the year! Looking into prop firms myself. Thanks for sharing RC! ~CGI :)