Objectives - July 2010 - Review

In this post I will review my performance from the past month, determining what was accomplished, what was not accomplished and why. Below is a summary of the objectives I set for myself during the month of July:

• Document daily study activities on blog (pages read, blogs read, trades, tasks, etc.)
• Post 1 Lessons Learned per week
• Continue backtesting and researching trading strategy
• Read 40 pages per week - Universal Principles of Successful Trading
• Simulate trading strategy and record daily trade results in journal
• Update market breadth indicators spreadsheet daily
• Monitor intraday performance of SPY and IWM daily
• Monitor StockTwits feed daily
• Read 40 pages per week - Statistical Analysis with Excel
• Complete 20 questions per week - Heard on the Street
• Post 1 trading strategy development post this month
• Archive 50 blog posts per week

The items in green are the objectives that I completed during the month. The items in yellow are objectives that were partially completed during the month. The items in red are objectives that were not completed during the month. Below is the list of items that I accomplished in July:

• Read 841 trading blog posts
• Archived 79 blog posts in email
• Posted 4 Lessons Learned
• Completed 10 backtest research studies
• Read 98 pages – One Good Trade – Bellafiore
• Read 290 pages – Universal Priniciples of Successful Trading – Penfold (completed book)
• Read 26 pages - Statistical Analysis with Excel for Dummies - Schmuller
• Completed 13 problems – Heard on the Street: Quant Interview Questions - Crack
• 45.5 hours of backtesting with StockFinder 5.0
• Updated market breadth indicators spreadsheet on 21 days
• Monitored intraday SPY and IWM activity for 20 days
• Recorded simulated trades in journal on 21 days
• Monitored daily StockTwits feed for 10 days
• Paper trading 8 short-term strategies
• Evaluating multiple position sizing and portfolio allocation algorithms
• Updated LinkedIn account information
• Morning cardio on 10 days
• Evening cardio on 1 days
• Ran 10.0 miles
• 25.5 hours of martial arts
• 200th blog post
• Martial arts training with the Canadian female Savate national champion, the US female Savate national champion, and the US male Savate national champion
• The IT department at my work has blocked StockTwits, labeling it a social networking site. I will no longer be able to monitor the StockTwits feed during the day while I am at the office.

I tried to monitor the StockTwits feed this month, but about halfway through the month the IT department at my work decided to crack down further on internet browsing.  They have now banned my use of StockTwits at work.  I enjoyed following the StockTwits feed because it was the best way to get a comprehensive look at what was happening in the market, but no longer.  In addition to StockTwits, most of the blogs I follow have also been blocked.  Fortunately, I can still read my blog posts during lunch using Google Reader, but the pictures are still blocked which does cause some occasional problems.  To fix this problem, I have started waking up earlier, checking my blog posts, and planning my backtests for the day.  This has made it much easier to keep each day productive and on point.

I consistently monitored SPY/IWM activity and updated my market breadth indicators.  Sometime in the future I need to update the spreadsheet by removing indicators that do not add any value, and add potentially helpful ones that I have found through my research. I have generated a list of various indicators for the short, intermediate, and long term behavior of the market. Some of these indicators will require some VBA programming. For now though, I need to continue to put that on hold and focus on my trading strategy and preparing for job interviews.

I continued to do an excellent job recording the performance of my trading strategies on a daily basis. Currently, I am tracking the performance of 8 different strategies. They are all short-term, swing trading strategies focusing on the mean reversion of stocks. In addition to the eight strategies, I am also evaluating position sizing algorithms and experimenting with the number of positions to hold at once (ex. 1, 5, 10, 20, 40 stocks) to try and reduce the equity curve drawdowns and portfolio heat/risk. Paper trading can be useful, but you have to understand the best ways to use it to develop trading tools.  Paper trading has helped me acclimate to the risk characteristics of each trading strategy.  It has also helped temper my enthusiasm for the results of each trading day, whether good or bad.  Paper trading has become part of my daily routine and the emotional aspects have dimmed, so the process-oriented discipline has allowed me to focus on developing my strategy.

I read through 841 trading blog posts last month and I was able to archive 79 blog posts in my email account this month. I will need to revise my goal for archiving blog posts each month.  For all the blog posts I read, there are few which add quality content to my archive. I do occasionally go back to previous years and add older posts to the archive, but for now I need to focus my time on more important endeavors.  I originally made this an objective because I wanted a personal data bank of the trading blog posts I thought were memorable in case the owner's blog went down, or google reader crashes, etc. So far I have collected over 725 blog posts. This is a great way to search any type of information such as systems, indicators, strategies, etc. If I ever need any new ideas I can quickly do a search in the archive for stops, mean reversion, exits, volatility, psychology, etc.

I read 290 pages of "The Universal Principles of Successful Trading" to help me get my paper trading strategy up and running in a live account.  I completed the book and it is a fantastic addition to my library.  It lays out a comprehensive plan, step-by-step, to develop a trading plan. I will continue to review this book throughout the coming months because there is so much great content to digest.  I also began reading "Heard on the Street: Quantitative Questions from Wall Street Job Interviews" to help me prepare for upcoming interviews. I did fail to reach my goal of completing 20 questions per week by only completing 13 problems for the whole month.  I need to determine a better way of incorporating these questions into my daily activity.  The questions themselves range in difficulty, but I feel the are excellent preparation for future interviews.  I think a more reasonable goal is to answer 20 questions a month, or one question each day during the week.

I spent 45.5 hours backtesting and 10 research studies during July, which is a fair accomplishment considering most of that was in the last 2 weeks of July. I have come to realize that it is more important for me to identify a trading edge than it is to read because I need to develop my trading strategy with virtual trading and journaling. I have identified my fundamental trading strategy, but it is still in its infancy. I have created a list of backtesting topics to investigate various aspects of the trading strategy such as entries, exits, position sizing, market timing, long/short allocation, etc.  I will continue making backtesting a top priority next month.

I failed to create a single post on trading strategy development. Currently, I have a list of about 15 topics on strategy development I would like to discuss on the blog.  I need to begin making short general posts on the many aspects of trading strategy development. These posts wont give the exact details of the trading strategy, but will address major issues and ideas that I have come across along the way. Each post will include an example with some simple results to prove my point.

I would like to make a couple of additions/upgrades to the blog. While I am reading all these blog posts and books, I usually think of questions that I would like to ask traders/interviewers.  I need to begin documenting these questions on this blog to help organize my thoughts and prepare for interviews.  There will be two categories of questions: questions I would ask the interviewer and questions I would expect the interviewer to ask me.  I will add two links to the sidebar for each question category.

I would also like to begin tracking sector strength.  I think it would become a good addition to my weekly routine to determine which sectors are performing the best and worst.  This will help me stay connected to the relative performance of different areas of the market, and may prove to be a valuable addition to my trading strategy.  Next month I will put more thought into how to measure sector strength and weakness, how often to measure sector performance, and how to present it on the blog.

The first half of the month was not very productive, but I stepped up my efforts and closed out the month with a strong finish. I spent the last two weeks of the month getting up in the morning and doing a cardio workout.  I also stepped up my martial arts and completed 25.5 hours including the Savate seminar I had with the US and Canadian national champions.  I have my half-marathon this weekend as well as an exhibition Savate fight in mid-August, so I need to continue focusing on my training. I will have to taper back on my stock research because the first two months will be filled with training for my events.  Once the events are completed, I will resume putting full effort towards my research and studies.