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Welcome to my 5th stock trading update report!

Now, this isn’t my 5th month of actual stock trading. Prior to August 2017, I paper traded stocks for over a year while I built up a lump sum of money to trade. $30,000 to be exact.

Prior to paper trading, I traded with real money starting back in 2011. Due to my active swing trading style, I was making money on the actual stocks but losing money overall because of all the commissions and fees. I realized the game wasn’t winnable (for my active trading style) with such a small account ($10-15K).

So I worked on my trading game while building up the capital.

Eventually, my goal is to trade for a living, but trading for a living is tough.

Really tough.

I’m never going to make a living off $30K, that much is obvious. Realistically, a million dollars of trading capital would be ideal with a goal of 10% per year. But if I can’t make consistent profits on $30K, then it doesn’t matter how much trading capital I have.

My gross return outperformed the market in August and September, but then severely underperformed in October and November as the market rally left me in the dust.

If you missed the previous reports, you can check them out below:

August 2017 Trading (+1.34%)
September 2017 Trading (+4.32%)
October 2017 Trading (-1.66%)
November 2017 Trading (-0.12%)

December Trading Summary

Here is my December Equity Summary directly from my TradeStation brokerage account:

Stock Trading Summary Dec 2017

I made $251.41.

For a positive return of 0.81%.

Nice to be back in the positive after 2 down months in a row!

As always, now we look at the market benchmark in order better evaluate this performance. In December, the S&P 500 index went up by 0.98%.

So I slightly underperformed.

The market rally tailed off a little bit during the holidays as trading volume decreased and investors sought to realize profits before year end.

Stock Trading Update December 2017

My cumulative performance from August through December is 4.69% which annualizes at 11.97%. This is both encouraging and discouraging.

Hey, if I can make 12% per year consistently, then I definitely have the ability to trade for a living. On the other hand, the S&P performance for the same time period is 9.51% which annualizes to 24.29%.

It’s DOUBLED my return.

On an after-tax basis, I’m lagging the market by 10.80%.

My Portfolio vs S&P Dec 2017

As you can see, I started off hot, taking the early lead over the market in this rally. But this rally has been relentless, never letting up, and has left me in the dust as I’ve traded sideways.

Looking at this, you could say my performance has been relatively poor.

December Trade Detail

I entered December with 1 open position carried over from November. Throughout the month, I opened 10 new positions, all of which were closed out before the year ended.

stock trade detail december 2017

I ended up with 4 winners, 4 losers, and 3 breakeven trades. In terms of outcomes, that’s exactly even but my winners were bigger than my losers so I finished the month with a small profit.

In case you’re wondering, the total profit shown here is larger than the monthly profit due to the one open profit trade carried over from November.

The crazy thing is that I had my best trade of the year (FNSR) and worst trade of the year (CRTO) not only this month — but on BACK TO BACK days.

On December 13th, FNSR gapped up on positive corporate news that Apple would invest $390 million into the laser chipmaker company.

FNSR trade gap up

I typically risk $150-$180 on any single trade with an average Reward to Risk ratio of 1.5. With my previous best trade this year netting $296.15, banking $461.03 from FNSR was a major coup.

But the celebration was short-lived when CRTO gapped down big on December 14th due to a lowered outlook after Apple’s iOS update.

CRTO trade gap down

I lost $346.45 on this single trade when my previous worst trade was a $183.91 loss, right at my maximum loss level.

Both of these trades were luck driven (both good and bad) as overnight news caused the stocks to gap beyond my target for FNSR and my stop for CRTO.

Moral of the story: Apple giveth and Apple taketh away.

win loss breakdown Dec 2017

Overall, I still have more winners than losers and my winners are bigger than my losers.

Ideally, I’d like to see bigger spreads, especially on the win rate, but these metrics are reassuring. You could argue I just need to make more trades, but forcing more trades by taking less attractive set ups is not a good strategy.

Bottom Line

My stock trading got back on track by making a little profit, but underperformed the S&P for the 3rd month in a row. My short-term swing trading is completely based on technical analysis where I target beaten down stocks (as you can see from my entries above).

Since the S&P is at its most overbought level in 22 years, good buying opportunities for my trading style have been very limited the past few months. But the process is the process. Five months and one huge rally is still a sample size in the world of trading.

Eventually, the market will come back to earth.

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