2017 trading review
2017 sure was a good year with tons of opportunities. Whether you go long or short trade stocks or cryptos there were tons of great setups out there. Overall, I’m very happy with my trading in 2017, I did lots of things pretty well and a few things poorly and I will get into all of that a bit later. Financially it was by far my best year ever and I beat 2016 by about 30%. Equities accounted for about 65% of my income and options about 35%. My biggest month of the year was November with 1.3 million in gains thanks to the hype in crypto currencies. (No I do not trade cryptos but the equities that are tied to them) I was profitable every month in 2017 and again most of my money was made on the short side. Even though I’m a short seller I have much love for the longs. Even though Algos and manipulators cause me some frustration throughout the year I’m very grateful to them as well. Without them we wouldn’t have opportunities like HMNY in the mid 30’s or RIOT in the mid 40’s. Manipulators will always have a special place in my heart.
First I will get into what I did well in 2017. Over the past several years I have really started to dramatically increase my size on what I call my golden setups. After trading for 11 years it is fairly easy to identify the top setups. The timing is obviously the difficult part. FWIW a golden setup to me is ETRM (Jan) , HTGM (march), HMNY (Oct), MARA( Nov), RIOT (Nov, Dec), XNET(Nov). There were a few more but this gives a good idea. Last but certainly not least was DRYS. Now DRYS in 2017 would not typically be considered a top setup but the continuous financing deals with Kalani was just an easy read imo. On these setups I did a pretty good job of taking minor paper cut losses on the upside and then when we finally get the crack taking on some decent size. I have gotten to the point where putting on 100k shares of something is not that big of a deal to me anymore. I have talked about this at traders4acause the past few years but if you have setups that you are so very confident about why would you not want to put as much money behind that trade as you can. This is what I did well in 2017. When I felt the timing was right I would short all I could and have a tight leash on the trade. I try to hold these setups on the downside as long as I possibly can. We have all seen a hype trade like HMNY ETRM and for the most part they all end the same way. Why wouldn’t you want to hold these as long as you possibly could? With my trading I always try to look for the bigger picture. Again, I’m a believer that the big money is in the big wins. Personally, I don’t try to hit it big every day or every week but I try to take full advantage of the 6-7-8 ect big setups a year.
In 2017 I worked every single day even on vacation. Yes I bring a laptop even on vacation because you never know what could happen. Maybe I take too many trips but there is never a year that goes by that I don’t have a big win out of town. I know some people frown on working even on a vacation but on the flip side I rarely work over 30 hours a week. On the summer months of May June and July I rarely make it to lunch. Again, after trading for 11 years I know the setups where I’m going to make money. If those setups do not present themselves I’m not going to sit at my desk all day. Trading is a mentally tough game, I firmly believe traders need a fair amount of time off to reset and refresh themselves. Wouldn’t you rather take time off when there are a lack of good setups? Sometimes it does suck to sit at the desk from 6am to 3pm (central time) waiting for that one stock to break but it usually always pays off, especially if you learn to take time off when things are not so hot.
There has been 1 big difference for short sellers in 2017 and that has been the dramatic increase in Htb fees and short interest. Usually my fees account for about 10% of my income but this year it will be closer to 20%. I bitch about fees just as much as everyone else but there is not much we can do about it. Sure, we can stop swing trading and holding stuff for long periods of time but that is usually my bread and butter setups so I’m not changing my style just yet. Heck for a period of time I was paying 15,000 a night just to hold HMNY short. Unfortunately, short fees will always be a big part of the game and it’s something we need to remember before holding a position overnight and over a weekend. Yes, short interest accrues over a weekend and holidays to.
A few things I did poorly in 2017 were getting a bit too aggressive early but luckily this only happened a couple of times. Personally, I was never a big fan of the HMNY news and I got caught with a few too many shares in the 8 area and got squeezed to 10ish. The other one was MNKD around the same time. I never expected MNKD to hit 6’s a few months ago and was down a decent amount up there. Luckily on both of these setups my loss was manageable compared to the year I was having, and I came back to be quite profitable on both of them. I did have to take on quite a bit of size and pay some hefty borrow fees on both trades but as we already discussed that is all part of the game. Overall in 2017 I traded quite aggressively and again it paid off quite nicely. There are always going to be times where stuff can hold stronger and run longer then you think. Again, the key is to cut those losses quickly and look for re-entry. Trust me I am the king of taking paper cut losses.
In 2017 another thing I did to help me was remember how stocks traded during the same period of 2015 and 2016. We all know late October and November can bring some craziness so why even think about getting in front of that especially on a day 1 move? I strongly encourage everyone to journal some of their trades and know how and when they are profitable. Also remember that entries are everything. I still don’t understand why traders will start a short on the upside and say they will add higher. How did that methodology work on DRYS in 2016? Certain setups can just run you over. I always prefer to wait for some weakness to hammer on the short side.
I still rely heavily on technical analysis especially after a day 1 move. There is rarely ever a stock that I trade now that I do not read the news or PR on, but as we have seen the past few years news just does not matter at certain times. The most important indicators imo are the time of the year, the float of the stock, and whether you believe there is manipulation going on. If we have a low float that is being manipulated, then being stubborn will just get you run over. Now if something is gapping on day 1 then yes the fundamentals are an extremely important aspect of the trade. Overall, I believe to be successful in the market you need to have a good grasp of both technical and fundamentals but my trading still heavily relies on the charts.
I strongly encourage traders to consistently put money away into something else. No matter how good of a trader you are I always think a backup plan is needed. First of all, we all will retire one day and secondly, we never know what kind of black swan event could ever hit us. If there is one thing I have learned as a trader it’s to expect the unexpected. I personally have a 401k that I invest in each year and I continue to buy farmland here in Missouri. It really doesn’t matter where you sock money to each month or year as long as it gets done. For me personally I usually take about 50% of my profits each month after taxes and put in some side investment and let the other 50% grow my accounts. I have also continued to keep opening various brokerage accounts in an effort to keep my HTB fees down. Right now I use about 6-7 different accounts but on a day to day basis I still recommend CenterPoint securities.
Going into 2018 I plan to keep my trading style pretty much the same. Day to day I trade small to medium size and when the big setups are there I plan to trade larger obviously with a tight stop loss in place. Lets hope the bull market can continue for years to come!