Today marks the greatest breakthrough I have had trading the markets so far. Although not for the reasons I initially expected when embarking on this journey.

To summarise, trading back in August-October 2020 using Simon's methods meant I had boosted my small portfolio up (at the peak) 40%! For a small account I felt on top of the world and I felt invincible (thinking I had cracked the market and would become the next market wizard).

And then it all went south. The market environment changed in October through to November. Using the same strategy as I had done, my criteria for picking companies became flexible. Ignoring my trading diary and system I would pick anything that came up that sort of resembled the criteria and hoped it would be the next trade getting me back in the game.

As my account started to plummet, my 40% became 10% and I thought since I was still in profit, I would give some silly hedging strategies a go (which were not actually hedges, more like positions).

10-20 terrible trades later, I decided to gamble on an awful trade, making me almost 80% exposed to the market.

At the end of all this in mid-November, my account was now -40% down. Looking back at my trading diary, I noticed huge blank spaces. No notes, no macro review, no risk management. Trading stocks that were almost the same graph, having at least 50% of my NLV in trades at any one time. Entering trades way above the mean just to give myself another chance at catching a market move.

In Mid November 2020, I then decided I would restart. My portfolio was thousands of dollars down, and I had no positions open.

I went back to Tao of Trading and re-watched the Risk Management section of Simon’s course. I watched it and felt my pride twinge. I can say that it was extremely embarrassing, and I felt ashamed to have literally done every mistake Simon told me not to do back in August/September. I remember watching the course material for hours back then, but it seems as though I completely ignored it once I had started making large returns.

Setting up a system I thought: The strategy works, but the emotional brain took over and set me on a course for ruin. That will be the last time I let this happen.

Late November I started to place new trades. Not 10-30% of my NLV, but 2-10%. Started taking profits on big moves of $100-$200 rather than $800+. The maximum exposure I allowed was 40% NLV at any one time, with hedges. I gave myself longer for positions to move (2-3 months rather than 1).

After a 12/13 trade loss streak, I had reached new years eve 2020 and I had taken profit on 10/13 trades. Little bit here, little bit there. Did not seem much compared to the vast amounts sacrificed to the market before, but the -40% became -30%, then -20%, then -10%...

So today: the 11th of January 2021, I finally closed out my 3rd position in NIO at 3ATR above the mean, bringing my portfolio to +$25 in the green. That couple thousand destroyed in but a few weeks, had been claimed back over weeks of small consistent successes.

Lessons learned. I now have 2 positions open that are around 10% NLV, and I see no trades good enough to enter today. I am so picky now, even in a bullish market! I look forward to the next opportunity whether it be tomorrow or next week. Aiming for 2-5% a week is a lot easier than the 10-20% goal I sought before.

Facing 2021, I now have a fresh mindset and have survived the destruction of an emotionally driven portfolio. My account is green, and I am proud of myself for not giving up because it is my life-long dream to trade. Please feel free to reach out to me if you have any questions, as I am not afraid to tell you my worst mistakes that define my trading for what it is becoming. I have noticed this translate into my investment life, as I take profit on the way up. Watching Crypto crash today, I could see the old version of myself fumbling to get out of positions. The new me sat back and watched, sitting on 3ATR profit, and watching additional buying then become a huge sell-off back to the mean. I still have the occasional urge of FOMO, but it seems to be nothing I cannot handle for the moment.

Thank you to everyone for reading my story, I hope there are lessons learned for you from a complete novice in the game. But in truth, for someone like me, I fail to internalise a lesson until I experience it myself. Go over Simon’s risk management section at least 5 times. I will be re-watching the videos once a month to stop myself from getting any silly ideas…

Here is to a successful and green 2021. I wish the best of luck to everyone and thank you so much Simon for your guidance throughout this process. For now, I will be focusing on my next 2% and will update next month. Signing off, Michael!

January 2020