Saturday, December 31, 2016

2016 Highlights Part 1: Making Big Changes

2016 was a big year for me in many ways.  I stopped being cheap and spent money to add several tools to my arsenal that have helped me immensely.  I changed brokers after 3 good years at SpeedTrader.  I suffered the biggest loss of my trading career and I responded with one of the best stretches of my trading career immediately right after.  I will break up this blog into 2 parts (discussing the big loss and recovery in Part 2) so it won't look like one huge blob of words.  

Of course it's human nature to be hesitant to spend our hard-earned money on certain things at times due to skepticism whether your money would be going into something worthwhile, but we must understand that trading, like any other business, has start up costs.   Also like any other business, the more you invest in it, the better position you'll put yourself in to succeed as you will increase the advantage over the other people who lack the proper tools and equipment.  I see lots of people that set themselves up for failure in trading before they even place a single trade.  They trade with a tiny 13" laptop, or a slow, inconsistent internet connection, a really bad broker with a poor platform, and so on.  I would know, I used to be one of these people even until this year.  Now after making the leap and spending some money to invest in my trading, I've seen my success substantially increase by virtue of just upgrading my tools because they help put me in winning situations more often.

After a discussion with @MarketOmega, I decided to make the leap and spend money on a better scanner, Trade-Ideas, and a live streaming news service with a squawk feature, Benzinga Pro.  I had been already a profitable trader up to this point so naturally I was stubborn and thought to myself, "why do I need to spend more money, what I have is already good enough, isn't it?"  I had previously used DASTopList as my gap scanner which worked well but they lacked a powerful scanner that helped find the midday plays.  Ultimately, I decided to give it a shot upon realizing I would react late to various alerts pretty consistently such as the Citron Resesarch short at alerts at the time, which were a pretty lucrative plays.  @MarketOmega told me that using these tools allowed him to be a step ahead of everyone else so realizing that I was always late and that Trade-Ideas and Benzinga Pro costed a combined $130 a month or so (and also a tax write off), I'd figure it was worth a try. 

The results were instantly felt and I was forced to eat the proverbial humble pie for being so stubborn and cheap for not wanting to pay the $130 a month for such essential tools.  The alerts from Benzinga Pro were extremely quick and they were also good for alerted other things as well such as insider buys/sells, option sweeps, filings, and just general news.  It took me awhile to configure Trade-Ideas perfectly but that's a testament to how many features it has.  But I was able to develop a solid gap scanner and also a solid momentum scanner which has immensely helped me pick out the best plays especially when there are multiple possible plays, Trade-Ideas helps me pick the one that's getting the most attention so I know what to trade (Trade-Ideas settings video will released on YouTube soon).  Within a few weeks I easily was able to general profits that paid the subscription fee several times over, reinforcing the idea that they were both definitely worth the investment.  But how ludicrous was my thought process that I was so frugal to the point where I wouldn't spend $130 on something that would help me easily make a lot more than that?  Yeah....

The other major change I made in 2016 was probably the biggest change in my trading career.  I left SpeedTrader in August after 3 years for Centerpoint Securities as my new broker.  I had mulled switching for over a year but once again I was hesitant because I knew my fees would increase and again I let my cheapness take over which led me to not make the switch and as a result I missed out on so many opportunities that I deeply regret not switching a lot earlier.  I even had my good buddy, Rob (@planeteyes), repeatedly try to convince me to switch and yet I was still too stubborn and was afraid of fees (My bad, Rob, Big Macs on me when you visit LA).

Centerpoint Securities definitely took my game to the next level.  If you guys follow me on twitter (@madazfootballr), you can see that my P/L increased greatly right after I made the switch and that is no coincidence.  Before I would not have borrows at the most crucial times and it would mess up my mindset as I would get frustrated that I wasn't making the profits that other people that had the borrows were making and I would, at times, force longs to try to make it up.  Of course, forcing longs on stocks that are obvious shorts are not the most ideal plays and subsequently, I paid the price for it, figuratively and literally.  How ironic is that?  I refused to switch to Centerpoint because I wanted to cheap out on the fees but instead I would take losses playing inferior setups due to lack of borrows.  In hindsight, it was silly and I can laugh about it now, but I'm glad I made the switch and now I've set myself up in a more much commanding position to succeed. 

Generally speaking with regards to these changes I made, yes they cost money but to reiterate my point, trading is a business.  It's no different than starting any company where you need to invest in equipment, employees, resources, etc...  If you're trading on a slow computer, make an investment to get a new faster one, if you're trading on one small 17" 720p screen, get 4 1080p screens (they're like 80 bucks now, I post deals occasionally on my twitter feed), if you're trading on a shitty internet connection, go get the fastest one!  Spend a little now or lose a lot later.  You get what I mean....

I was stupid to not see this despite being in my 5th year of trading.  I limited my potential.  Despite doing well already, so to speak, I could have done even better had I realized this sooner.  

Moral of the story: don't be cheap, invest in your trading, the results will speak for itself.

Part 2 to come....

If you're interested in Trade-Ideas, click bit.ly/2dFvB7t and enter MADAZ15 as the Promo Code for 15% Off!

If you're interested in opening an account with Centerpoint, tweet at me on twitter @madaznfootballr or email me madaztrader@gmail.com 

3 comments:

  1. I think you gave some really great advice. For anyone who is going to be serious about trading, they need to do it right. Something such as having the wrong equipment can be a huge factor. I am glad to hear that you made some changes and are now seeing huge rewards because of it!

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  2. Is TOS working for you now they reduced commissions to 7?

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