13 Dec 23 Practice Results (KR)

So I’ve not posted the last few days because I spent time analysing my past practice results.

Risk Reward Ratio

First off, analysed the optimal risk reward ratio based on my practice results. I recorded the best risk reward ratio achieved on each profitable trade until an ATR stop loss is breached.

The ATR stop loss is based on 4 times the 14-day average true range.

The results are as follows:

Risk Reward Ratio	1	1.5	2	3	4	ATR
Day 1 Frequency	12	10	8	4	2
Units of Profit	12	15	16	12	8	20.4
Day 2 Frequency	21	14	10	6	4
Units of Profit	21	21	20	18	16	14.8
Day 3 Frequency	11	9	4	3	3
Units of Profit	11	13.5	8	9	12	12.7

Using a 1.5 risk reward ratio produces the most units of profit. I’ll try that for my practice sessions from now on.

Using a ATR trailing stop loss also seems to work well, but only if the stock is trending. Given that a trailing stop takes longer to exit a trade, I’ll consider this in future if I can find some ways to quantify when a stock is trending.

Another Approach

Next up, I looked through the charts and considered another approach for trade entry. Given my abysmal practice records, I need something less discretionary and I have to improve on my consistency. Therefore, I think I should focus on one type of setup first, instead of trying to catch all profitable trades. The setup that I’ll be focusing on is a breakout of a tight channel. The breakout candle should be a decent size and be of the correct colour, preferably a strong trend bar.

Here are the practice results for yesterday.

Practice Date: 13 Dec 2023, Ticker: KR

Date	Trade	Quantity	Entry	Stop Loss	Profit Target	Result	Extreme
1 Mar 05	Buy	1	9.08	8.626	9.761	Loss after 6 days
19 Apr 05	Sell	1	7.57	7.9485	7.00225	Loss after 7 days
20 May 05	Buy	1	8.545	8.11775	9.185875	Profit after 24 days
5 Oct 05	Sell	1	9.885	10.37925	9.143625	Profit after 81 days
8 Mar 06	Buy	1	10.225	9.71375	10.991875	Loss after 28 days
24 Apr 06	Sell	1	9.74	10.227	9.0095	Loss after 6 days
23 Jun 06	Buy	1	10.385	9.86575	11.163875	Profit after 18 days
2 Nov 06	Sell	1	10.94	11.487	10.1195	Loss after 23 days
12 Dec 06	Buy	1	11.94	11.343	12.8355	Profit after 32 days
20 Feb 07	Buy	1	13.33	12.6635	14.32975	Loss after 6 days
4 Apr 07	Buy	1	14.735	13.99825	15.840125	Profit after 41 days
25 Jul 07	Sell	1	13.795	14.48475	12.760375	Profit after 10 days
14 Sep 07	Buy	1	13.505	12.82975	14.517875	Profit after 3 days
25 Jun 08	Buy	1	14.3	13.585	15.3725	Loss after 20 days
7 Oct 08	Sell	1	12.835	13.47675	11.872375	Profit after 4 days
19 Jan 10	Buy	1	10.515	9.98925	11.303625	Profit after 30 days
21 May 10	Sell	1	10.705	11.24025	9.902125	Profit after 4 days
8 Jul 10	Buy	1	10.305	9.78975	11.077875	Profit after 22 days
22 Feb 11	Buy	1	11.66	11.077	12.5345	Profit after 57 days	2 trades after this not considered because profit target not hit yet. Both trades are losers
1 Jul 11	Buy	1	12.49	11.8655	13.42675	Loss after 25 days
8 Feb 12	Sell	1	11.775	12.36375	10.891875	Loss after 16 days
20 Mar 12	Sell	1	12	12.6	11.1	Profit after 40 days	1 trade after this not considered because profit target not hit. Trade is a winner
1 Jun 12	Sell	1	10.965	11.51325	10.142625	Loss after 14 days
17 Oct 12	Buy	1	12.47	11.8465	13.40525	Profit after 30 days
28 Feb 13	Buy	1	14.63	13.8985	15.72725	Profit after 11 days
18 Apr 13	Buy	1	16.815	15.97425	18.076125	Profit after 53 days	1 trade after this not considered because profit target not hit. Trade is a winner.

Net Win

Profit: 16, Loss: 10, Net Win = 16*1.5-10 = 14 loss units.

If one loss unit is 5%, 14 loss units is equivalent to 70% returns over about 8.5 years. That works out to be about 8.3% for one stock.

Some thoughts

Immediately, I notice that the trades take longer to hit profit target. This has to do with the fact that I am now using a 1.5 reward to risk ratio, and probably also because these trades just take longer to work.

I may not be able to use options for leverage.

The trades above use a 5% stop loss and aims for a 7.5% profit.

Assuming that I use 50% of my account size for each trade, each loss is 2.5% of my account. Each profit is 3.75%. Therefore, I need to a net win of 27 trades to hit 100% profit a year. That would be v difficult given that each trade takes so long to profit. I don’t know what is a safe way to achieve a higher annual percentage profit. But that is for the future me to worry about. What I need now is to improve my win rate.