Today I woke up ready to go, as I do most weekends. My oldest daughter is like me, she wakes up. While the youngest & my wife are the type to sleep in. So my oldest gets to watch some TV while I catch up on trading homework.
Today I decided to compute my weekly P/L to see how it looked. And it looked much better than the daily P/L I had been agonizing over.
I only have one losing week since I started real money trading at the end of April (as a reminder, prior to that I was on a self-imposed sim trial period). So one losing week I can handle that. And it was equal to my average winning week. That’s 1 losing week out of 10, so 90% winning weeks. I think if I can keep the same performance for the rest of the year I’d be doing great. And when I think about that losing week and how it was due to my not taking a few stops, I realize that loss could be much smaller than it was. So once again, there is hope. Markus has previously said that monitoring the P/L daily is too fine-grained and I have to agree with him.
I also decided to graph this weekly P/L to see what it looks like, both cumulative and non-cumulative.
The cumulative graph really surprised me because it tells a different story than the equity curve I posted in the Houston we have a problem post. This equity curve is making a new high! I love a good mystery so why the contradiction? There are a few reasons.
The one I posted a few days ago is straight from the broker’s website. I like to use this one because it’s 100% real & honest. Anyone can make a fake equity curve with Excel. However, there are some issues.
- It’s just one of 3 accounts that I use. I have a back-up account and another account I use for swing trades which includes any trade I will hold overnight. My true P/L is the combination of all accounts.
- It includes commissions which I do not include in my trade log. I don’t include them because I look at them as a cost of doing business, much like the fees for my platform, subscriptions, internet, etc. In May I calculated my commissions to be 10% of my net profit. As long as it stays low then I prefer not to pollute my P/L with it. More on this in a minute.
- My account is funded in Euros and the broker reports the P/L in dollars so there are slight currency fluctuations.
The other reason my weekly equity curve is making a new high is because I had an outstanding day on Friday.
Looking closer at commissions, I calculated my commissions for July and I came up with 29% of my net profit. That’s 3 times the amount in May! My trading has not been going as well in July. So there was not enough profit to offset commissions. If I hadn’t had a losing day on July 1, if I say that day was breakeven, then commissions drop to 14% of net profile. So if I am profitable, commissions should be around 10% of net profit, and not more than 15%. I believe this is acceptable. There aren’t many businesses which have less than 15% operating expenses!
So it’s not as bad as I thought. If I can keep my losses small, the commissions will drop back to 10% (or lower). And my equity curve made a new high this week bringing me out of the drawdown. Now I just have to keep focusing on the items in my action plan and keep improving.
I’d like to thank everyone who has given me feedback over the past few months by leaving comments in the blog & twitter and/or via the contact form. I’ve had some interesting exchanges and that’s what makes this blog worth it. I think very few traders post their real P/L and discuss it in such intimacy. It’s been helpful to me and I hope it’s been helpful to you.
Have a great weekend.