Eclipse Technologies

Happy New Year!

Today’s post is less technical than usual – I’ll be reviewing my personal (non-algorithmic) trading stats and metrics for 2023.

It was my first ever year trading full time/ professionally. I worked for a proprietary trading firm from mid 2022 until April 2023, and continued trading independently while pursuing post-grad education after I finished my Finance degree in May.

2023 has been, by far, the best and worst year of my life. I have never before experienced the highs and lows of life in the ways I did this year.

Since 2023 was so far below average, 2024 will almost certainly be better assuming it’s an average year (mean reversion!)

But – the highs make the lows – this is true both in trading and in life. One can’t exist without the other. We only begin to truly appreciate most things when we’ve also experienced their opposite – there’s no joy without pain, no light without darkness, no life without death.

It is because of those experiences, not despite them, that I am where I am today. I swear I’m not being cliche, you can actually see this in the charts below.

2023 was the year I finally became consistently profitable, and in the last 2 months, I made back every penny of the losses I’ve incurred while learning to trade over the last 5 or so years. I am extremely proud to say this. It has been far more of a psychological journey than one based on skill, and even though this is only the beginning, it has been incredibly satisfying.

That’s enough philosophy for now – here are the stats.

• I traded for about 9.5 out of 12 months, missing ~2.5 months for personal reasons.
• I spent an average of 3.5 – 4 hours a day for 200 out of 252 trading days, which comes out to ~750 hours.
• I spent an additional 3-4 hours, on average, on 341 out of 365 days researching, testing, and reviewing trades – about 1190 hours.
• In total, I spent 1940 hours on trading this year, give or take.

How did I use that time?

• In total, I made 177 options and 39 equity trades for a total of 216 trades.
• I did $1,384,077 worth of dollar volume in equities and options (round trip).
• “Only” $185,736 of that came from options. Shares are a lot more capital intensive.
• My largest dollar position was $98,922.00, an intraday long on TSLA shares.

^My profit factor was 1.202

The main thing here was less about limiting losses, since I was actually not bad at defining my risk (I knew at what point my trades were no longer working) and more about giving wins room to continue. Another big factor – when I was stopped out, I sold my full position at a loss, whereas on wins, I sold half my position to cover my risk (1:1) and let the 2nd half move higher, which was how I was able to have slightly smaller wins than losses and remain profitable. I want to get my avg win larger than my avg loss this year, but the 1:1 kick strategy is super helpful for staying above water when starting out.

My most traded symbols – I generally stuck to my bread and butter/ what I knew worked for me. This worked decently, but to really grow I’ll need to trade higher volatility names with more edge.

These are running averages, so the beginnings look wonky. The one negative spot early on is where the worst part of my year left its mark on my trading. You can also see the turnaround/ “breakthrough” point about halfway through, and the slow and steady improvement that followed for the rest of the year.

Trading is mostly psychology followed by statistics, rather than the other way around-you can’t achieve the expected statistics without an objective approach to the market, because our minds do not, by default, operate (and by extension, make decisions) subjectively. Research has repeatedly shown that our brains “create” reality rather than simply observing it, by subjectively interpreting objective outside information. And, it does this outside of our conscious awareness. This is the major hurdle that all traders face, and why more than 95% of us fail. It is almost 100% unconscious, so it’s rarely noticed, and it’s even more rare that it’s ever addressed or mastered. The mindset needed to maintain a fully objective view of the market is the total opposite of how we process information when going about our day-to-day lives (by “process information” I do not mean thinking – thinking is conscious). Trading “in the zone” is essentially a self induced ego-less state. So far I’ve only seen the tip of the iceberg, but it has also greatly improved my life outside of trading.

Anyways, initial profitability and some improvement is great, but there are several things I want to work on in Q1 this year:

• Increase my average risk to reward (honestly, it sucked)
• Trade more diverse, volatile names and stop trading my biggest money pit, AMZN (paying for prime is expensive enough!)
• I want to take more trades in general – I started doing this in the last 2 months, but I’d like to continue the trend.
• Improve my W/L ratio.
• I’m incorporating trades based on news/ events.

Happy New Year! I hope you have a fantastic 2024, and best of luck in trading or anything else you’re working to be better at!