• Dragostin Kozhuharov

Change of trading style = better results

25th March until 2nd April

Another period of building the account up and then letting it all go. After it happened, I decided that I have to punish myself for the mistake and kept trading which led to my first drawdown on the initial balance.

This is a very good illustration of the idea that when you screw up, you subconsciously feel the need to punish yourself.

Going through this experience for the third time in a matter of 1month made me realise that I am too harsh on myself, even for small mistakes.

I hadn’t lost much money, even though yes, I was making the same mistake. You have to put it behind you, pick yourself up and focus. You start to follow the rules more rigorously and prepare better. The opportunity to make money is going to come. You need to be prepared for it.

In the last few days of my futures trading between 2nd April and 9th April, I focused on doing this and in the end the account was very slightly down about 1% from initial amount deposited.

I decided that maybe it was time to ditch day trading again as it wasn’t very well suited to me.

However, I didn’t go back to my sort of swing style of trading. I decided to give arbitrage a go.

The Oil long trade

Whilst I was setting myself up for arbitrage trading, I saw an opportunity in oil. At the time for the first time ever WTI futures were trading at a negative price. It was a good time to buy oil, but I didn’t want to go long the commodity, in case prices crash again and kick me out of the trade.

I was looking for other methods to express this trade and decided to look at shale oil stocks in the US. I was looking at smaller ones which were cheap, but found some of the bigger ones to be at attractive prices as well. I liked the stock play because if something happened with the company, the worst thing that could happen was for the stock price to go to 0. Then I would lose just the amount invested. I used the Revolut app to buy the shares, and some of the companies which I had marked for buying weren’t available so in the end I bought only the following:

I didn’t use all of my account on this trade. It was a very good risk reward opportunity, but at the time I decided not to go all in on it.

The oil market did turn, and I closed the trade at a very good profit. If I had been patient and held it until now, it would have been a lot more profitable. Patience is a virtue even in trading.

The Arbitrage days

For anyone who doesn’t know what arbitrage is – it is an opportunity to make money risk free due to market inefficiency or some other features of a particular market.

I had found such an opportunity through friends of mine. I am not going to go into much detail in terms of what it was, but essentially it involved going long and short similar assets at particular times.

I did some testing initially and the system was working. What I found at the time was that it was a good way to trade as much as possible, whilst minimizing risk. Sometimes you could still lose money but it would be a very limited amount.

I did find it boring at some point. I also saw that I was making money on almost all of the trades in terms of getting the direction right. In the end I decided to go back to risk taking, as I would make more money that way.

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