When I summarized my trading from 2002 to may 2012, I looked at how much of my daytrading profits were generated from the best trading days. Before I did the analysis, I expected the “grinding” (ie. the small profits every day) to be my greatest asset in trading.
It turns out that the 1% best days equals 11% of my total profits over that ten year period. Whether this number is big or low I don’t know (compared to other traders), but it was actually smaller than I expected it to be. However, 19 of my best 25 days were in 2008, 4 in 2007, one in 2006 and one in 2005.
Here is a bar graph of all my trading days:
What can I learn about this?
- When the markets conditions is favourable I have to be there trading. No holidays allowed. I didn’t take holidays in 2006, 2008, 2009 and 2010. In 2012, when conditions have been less favourable, I have traded lightly and done other stuff, among other things invested in real estate.
- When the market conditions are favourable, you have to trade size. Looking back, from 2006 until 2010 I should have traded a lot bigger size. I have to go for the jugular when the edge is there!
- BUT! Never underestimate the small profits/grinding. They do add up!
- Perhaps contradictory to point 1, but you never know when a good day suddenly shows up. 1. august 2012 was such a day for me. I made more money that day than all my trading for 2012 until that day.
- I trade too small. My statistics are pretty good, but I have to take greater risk. Hopefully my new secondary income in real estate will make me a bit more aggressive.