Its been a November to remember for me thus far…
How many option traders do you know that buy options with a win-rate over 70%?
I’ve placed 43 trades—pulled out over $24K in profits—at a 74% win rate.
Of course, the month isn’t over yet, and it’s never wise to count your chips while you’re still at the table. Nor am I writing you this to pat myself on the back and tell you how great I am as a trader.
I believe any trader can improve their trading results if they have a system in place and a set of trading rules to follow.
But that’s not all.
A game changer for me lately has been my journaling.
I’m not talking about some “Dear Diary” stuff, I’m referring to a trading journal, one that helps you identify what you’re doing right and wrong.
Imagine a business that didn’t keep receipts, stats on inventory, and other important statistics that are used to make impactful business decisions.
Well, that’s what you’re doing if you don’t keep a trading journal.
Imagine listening in on a conference call, and the CEO comes on and says “I think things are going great, we saw some really good stuff, and we hope to improve on that.”
That type of vagueness would draw some serious red flags.
But many traders, are not business-like, and have no clue what they are trading, the type of trade it is, and the performance metrics behind it.
In other words, they are flying blind—relying on hope to get them the results they desire.
What I’m about to share with you could change the course of your trading career forever. I’m not kidding. I’m going to show you how a seven-figure a year trader analyzes their trades to improve
Table of Contents
Digging into the headline results
Whenever I review my trade journal, I start with a 10,000 ft view. I like to get a sense of my general performance and whether it’s sustainable.
As I’m evaluating 12 trading days into the month, I want to know the action I’m seeing daily. So far I completed 35 trades with an additional 8 open (43 total). My total profits sit at $24,000. On a daily, weekly, and monthly basis that comes out to:
- 3.6 trades and $2,000 profit per day
- 18 trades and $10,000 per week
- 80.5 trades and $45,000 per month
I’m pretty happy with those stats. As a full-time trader, I want to know the worst I did at any point in the month. That came with four consecutive losses in a row for a loss of $6,000… a drawdown I can live with rather comfortably.
So high level, everything looks great here. Now, let’s dig into some breakdowns.
Level 1 – Types of trades
Next, I want to run some stats on the types of trades I took. I categorize my trades as ‘lottos’ and swings as well as puts and calls.
Lottos are trades that I take that are either day trades or last a few days at maximum.
First, I can say I’m balanced between 22 swing trades and 21 lottos in the month. That’s ideal for this current market. Lottos reduce my exposure but come with higher risks and rewards.
So how did they each perform?
- 84.2% lottos won for an average gain of 62.3%
- 62.5% swings won for an average gain of 8.4%
At first you might question why I would bother playing swings at all. I mean clearly, the lottos do way better. However, my long term journaling showed me that different trades work in different markets. Lottos tend to work better in choppy to sideways markets, while swings do better in trending markets.
Now, let’s break down the puts and calls. First, I’m clearly biased towards calls. I know that my setups work better with them and trending markets. So it’s no surprise that 71% of my trades are calls.
They break down as follows:
- 84% of calls won for an average win of 53.2%
- 50% if puts won for an average loss of 2.4%
What this tells me is something I sort of already knew… either my strategy or I don’t work well with puts. That works great for the longest bull market in history. But it gives me something to consider for down the road.
Level 2 – Consistency
Since I trade for a living, consistency is vital. I can’t live losing $250K one month and winning $300K the next. That’s not sustainable unless you’re trading a small proportion of your overall wealth.
So I want to see how things played out over time. Here is a graph of my cumulative profits over the trades I took:
Cumulative profits by trade
Other than a mild drawdown due to the consecutive losing trades I mentioned before, the wins are pretty consistent. Not all the wins are stellar (some made $40). But the overall slope of the line is smooth and gradual.
But let’s look at this from a time perspective since we all live day to day and not trade to trade.
Cumulative profits by day
As I said, I had one bad run at the beginning of the month. Then I actually didn’t do much for several days. But, when I got back in things worked out nicely.
You can get all the details of my trades and follow me live at Weekly Money Multiplier. Do yourself a favor and invest in yourself.
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