I wrote about starting to paper trade again in September. I had developed a good little system for myself and was using the sight TradeScores as the helpful tool to manage it all.
I ended up creating my own spreadsheet to review numbers the way I wanted too. If it looks confusing, it is probably because I created it and I like a lot of numbers. Check out my Paper Trading Results. Note: This gets updated occasionally, so you may notice the figures change from what is stated below.
The Quick Summary
Anyways, as of the end of October, this is the quick review of how it went and what I noticed:
- I had 38 trades throughout September and October. Several factors get to this number. One being how often I took the time to sit down and look for trades. Second, I was using two simple strategies for filtering so was limited by what it was able to find. Third, I did try to not trade too much to simulate what I would be able to do with a real account size (only so much money to invest with). Fourth, I did want to clear 30 trades to get an realistic view of the strategy (for this market).
- My expectancy, as of October 29th, is 0.42. That means that on average, I would expect a return of 0.42 x my risk across all my trades. So if I risk $200 a trade. Then I would get $84 a trade. Across 30 trades that would have been $2,520. I like that it is a profit, but the number should definitely be higher. If you don’t understand this concept, you should read Trade Your Way to Financial Freedom. I prefer thinking in these terms vs. percentage.
- If I analyze profit/loss for closed out trades (I no longer own them), I was negative up until today. Because I closed out my losers (stopped out) early so thus took early losses. While my winners take longer to form and I’m still in a lot of them (though I have stop losses in place to protect a lot of the earnings). So the lesson being, when starting out, you would definitely need some buffer room to protect yourself until you start to get out of the winners.
- Some of my trades were actually bigger than what I could do. I was using risk technique to say how many shares I should buy. That would be larger than what I could actually do in some scenarios. So that can help rule out a stock sometimes.
I like the system and learned a few things from it. I will continue to use it. I find that I am doing some real trading now, so stocks that make the final round of consideration, but not the cut have been going in there to keep track of. I also use it for testing alternative strategies I’m looking at.