The 100k Crash Course

This post is dedicated to all who are currently studying how to trade because they got their accounts burned when the dreaded bear came.

February 2020, the local market had been on a sideways-to-down trend - plays have become scarce and short-lived, and outliers are yet to be seen.

Meanwhile, global markets have been trending and the US market has been creating new all-time highs. I had the genius idea to create an account and go into global markets - because why not right? It's a buffet of opportunities, earning both ways across different instruments! Stocks, Commodities, Indices, Crypto, etc.

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"Stairs going up, Elevator going down."

I remember hearing Javi (AKA Taylor) always say this line when it comes to bear markets - because it has always proven that FEAR is a stronger emotion than GREED. Allow me to help you visualize:

History is unfolding before our very eyes and we're witnessing one of the worst market crashes of all time. If you're a trader or forced to be a trader because of your baptism of losses, then this is the perfect time for you to study and learn!


Let me welcome you to my 100k worth Crash Course on how NOT TO Trade the Global Markets.

For this experiment, I deposited 2kusd or 100k worth of funds to learn how to day-trade and scalp. To give you some context on, here are 3 things you need to understand about me:

1. I am no scalper. I'm more of a swing/momentum trader and trend follower.

2. As I have stated many times before, I am a high-risk trader.

3. I have a solid 9-years experience in our local markets, but Less than 2 months in Global. I don't consider virtual trading as an actual experience.

It has been a solid one month since I have started learning and trading this account using real money (not just virtual/demo) and I've got to say, THAT WAS INTENSE!

Let me share you some of the key reflections and learnings I've compiled so far :

I. Progress takes time.

After a full month of obsession, holing up like a hermit, sleepless nights, and seeing no sustainable progress,  it got quite frustrating. I felt like I was back to square one.

They say it takes years to become an overnight success. You don't google on how to become a doctor and expect to be operating on your patient the next day. Even if you have a mentor, it will still take time for you to become good, more so if you wish to become great!

If you start to become frustrated, remind yourself of this and don't be too hard on yourself. Respect, Trust and most importantly, Love the process.

II. Learn before you Earn.

I'm managing 3 personal portfolios locally and all have had decent growth despite the choppy market. The 50k challenge I started in 2018 has now tripled in value thanks to the recent volatility plays.

Having success and a working system locally has led me to a path with ego and pride. The problem is, I brought those two with me in the Global arena and forgot that my priority was to Learn. Couple that with the expectation of people that I perform well has led to unnecessary pressure and a disaster.

As traders, our main priority is not to earn. Our priority is to take and perform our best-planned trades one at a time. Money is just a byproduct. 

This might be quite a challenge especially if you're in a state of Lack or Need of money as this will persistently blind you towards your goal. 

  

So if you're just starting out, it is important to find ways to detach yourself with the money in your account. It will help you make objective decisions. Think of your money as game credits - this mindset helped me when I was starting my trading journey.

III. Trading Mistakes Committed

(Notes to Self)

I'm learning from scratch. No mentor, classic trial and error.

Impatience and Switching Timeframes too Often

I look at daily and hourly charts for context or directional bias. After all, knowing the trend is the first step to becoming a profitable trader. All my entries are on the 5-minute charts. But I oftentimes catch myself switching timeframes more than I should. Gigil magtrade instead of waiting for perfect good entires that I switch to 1-minute or 15-minute charts just to force my buy/sell signals.

Since I'm learning how to day-trade and scalp, this demands a lot of attention from the market especially when I'm in a trade. Here's a problem I've identified: because there isn't a lot of opportunities in the local market, and there are TONS in global, I found myself trading non-stop - because whenever there's an opportunity that presents itself, I grab it. This is a form of a scarcity mindset - because the reality is, there will always be opportunities in the Global Markets.


This had led me to...

Trading even with the Lack of Sleep

When you lack sleep, you can take on larger risks. It's scientific. It's similar as to when you're drunk. Notice how most people are able to do batshit crazy stuff when they're drunk? Or how a single shot of vodka or tequila can make a person confidently say a wedding speech on the spot.

And after taking a few serious hits, this eventually led to...

Attempting to compensate for losses by Over-trading and Over-leveraging which I usually call Makabawi Syndrome

Over-trading is never good. As traders, we must learn to take quality trades, not half-baked ones. And the urge to get back the money you lost will become stronger the more you trade. A circuit breaker must be in place for you - a checklist that will tell you to stop and take a step back from whatever you're doing and purge. Because once you lose focus on your objectives, it's all over.

My leverage on 

Stocks : x2 - x5 

violated and did x10 to compensate

Index : x5 - x20 

experimented with x50, and when that didn't go well, did several x30

Commodities : x10 - x30 

there were instances where I had to do x50 with minimum allocation to compensate for the minimum amount required to trade the instrument.

Stop-loss levels were all set at invalidation points. The more volatile the instrument, the best that you lower your leverage and volume. 

Higher leverage would be ok when these two criteria are met:

A. Low market and instrument volatility - you don't want to be doing a x10 leverage and the instrument you trade usually gaps or does 10% swings. I recommend currency pairs, commodities, or indices that don't gap too much on the opening bell.



B. Tight cut loss levels - as long as you have tight cuts, you'll be fine. But if you want to have a wider margin of error, then lessen your leverage.

While these mistakes can be treated as isolated cases, usually one of these will cause another to show up. It's like late-stage cancer metastasizing throughout the body.

Yep. I thought I was way past this. But apparently not. 

Good thing I was at least aware of my negative state as I decided not to touch my Local portfolios. Because whatever current state of mind I have would eventually spill over to my other trading accounts. Be wary that you do not make this mistake.

Currently assessing if I would like to continue learning this strategy or just focus on my working ones.   


It's crazy to think that this 100k trading account has caused me more stress than my bigger ones where I would easily cut 6 figures if my stops were hit. And if I am this stressed out over a hundred thousand worth of tuition funds, how much more the people who are still invested in the markets with their hard-earned money, savings, and retirement fund? And If you're that person...

I'm sorry for your loss. 

May we all become wiser from our experiences. And while a great part of history is unfolding, remember that this too shall pass.

FOMO and System Hopping

System hopping and FoMo is a bad mix. It's like drinking a mix of Tequila and Milk. It's a common problem traders have and I got tons of this kind of message in my inbox - this guy asked everything in one go and so I'd like to share what I told him in response.

I don't think "hindi mo talaga siya maiiwasan." - you can. it's just that nagpapadala o nafofomo ka sa ibang traders. My advise? Start to unfollow all trader friends na nkikita mo sa social media. And focus on a system that would fit your lifestyle and do that for at least 6 months - don't force systems that aren't compatible with your lifestyle, otherwise, this:

You can also read comments from other traders in the FB post by clicking here.

Trading as a Performance Sport

Many consider trading as a performance sport. And if professional athletes have coaches, I have my own. 

Meet my trading psychologist/peak performance coach Rooting For Celeste. And let me give you a glimpse of what she does.

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Today was quite interesting for me as I started to dive into the FX markets with real money. 400USD lang muna since newbie pa and getting a feel of things.

Take note:

1. I have a system I am adapting into.

2. I know the rules and how to execute them.

3. I have mentors that are currently guiding me.

And as you all know, our beloved PSE went wild today with several issues flying - 8 in my watch-list, 3 of which were in my port ready for selling for a switchblade.

It was chaos.

By the end of the trading day, I hit at least 500k in profits and took a nap. Pag-gising ko, BOOM! 400USD in my FX account got decimated and I am left with a measly 22 bucks. 18k pesos down the drain. 

Dali-dali akong pumunta sa workstation ko and went Sherlock on my trading day. And in these special cases, called my coach for help. I wish people can see how these sessions are done, iba grabe! You know that feeling when you're a level 2 trader and you just "discovered" a high probability setup while doing your backtesting and you think to yourself "this is the shit that my life has been missing!" - that's the kind of feeling I get whenever I have these psych sessions. Will try to record an actual session one of these days so you know what I mean.

After the session, we got to identify what went wrong. I traded even if:

1. I didn't get enough sleep.

2. I lacked the focus.

3. My current psychological state wasn't sharp and healthy.

4. I was busy doing other things I shouldn't have been doing during trading hours.

5. I was aware that I was getting high on certain negative emotions (manifested by my right leg restlessly fidgeting.)

Consider this: Professional athletes make sure they are at the optimal condition when they play or fight. Because it would be stupid to play at the championships when you're injured - physically or psychologically. And today, I was stupid.

There are things you discover about yourself on your own and that's cool if you do. But its amazing when you are able to unlock and see yourself through the elusive 3rd and 4th panes of Johari's window.

I knew what I was supposed to do, but I messed up on my actual execution. I may not have lost 100k pesos today, which is my initial psychological pain threshold, but I lost a certain level of discipline which I need to recover as soon as I can. 

I'm sure that you are aware that big institutions that handle millions and billions of funds have risk managers and performance coaches employed to help their fund managers. Because a single professional fund manager that is left unchecked, no matter the years of experience, has the potential to deal enormous damage to their funds. At kung ginagawa nila, why not we retail traders do the same? This is one of the reasons why we advocate having accountability groups/partners in trading. Hirap kasi pag wala kang kausap at ka de-brief sa mga ganitong bagay diba? Wag lang kayo mag hawakan ng kamay pag pareho kayong naipit. Hindi ito prayer meeting. 

So always remind your accountability buddy to

 CUT

THEIR


LOSSES

Thankfully, I have a beautiful performance and psych coach keeping an eye on me, making sure I don't dig my own grave.