Lean Hogs Release The Pressure

by Matt Romantech on January 8, 2018

Getting to $1k a trading week won’t be hard, I am just not squeezing, I have to learn to be patient.

It’s going beyond that that becomes a challenge.

I should be able to get there in the next few months, but still using elements of the new system that are fundamental.

When it rises you add more. When it drops you rip back the position sizes and after 3 in a row you in fact cut losses to release the pressure.

When ever it is rising on one side and dropping on the other you are piling up on the position going up and cutting back what your adding to the downside, even cutting away old positions as you go, so the trend is making that opportunity for you. If it sits in the range, you don’t cut.

You don’t cut any positions within 2%. Within 4%, you make the call and go easy. The point is to clear out stuff that’s beyond 4-5% so you’re left with stumpy little positions, no more than $20k worth.

It’s certain phases that become so important to release the pressure, so that when the crushing avalanche kicks off, you’ve already taken your chance to ease off the pressure so you’re not underneath it.

When a big trend has fallen 1% or more off it’s tip and a reversal is seemingly likely, you can cash in your green numbers because you have that opportunity to rip some off the other side, release the pressure, let the trend build up the momentum again in the direction it’s going.

This is where you have that technique of increasing or decreasing position size depending on which way it’s going.

If it is trending up, the positions will remain larger. only if it’s trending down will the positions get smaller.

If it is ranging, we don’t try to be clever. We take our smaller positions profits as it goes back and forth and we collect the money.

It doesn’t matter if we choose to write off some loss here – it is clearly not going to leap to 4-5% just as it is lazily sloping back and forth, but constrained ranges can often precede vigorous break outs but the concept remains simple, if it’s going in one direction, keep adding more, it has to extend to become profitable, your profit comes when the high has been reached.

If no trend ever forms, the position size never changes. The price doesn’t move a lot, so it doesn’t matter, you don’t need to adjust and write off, you still make your money with scraps, you don’t try to milk it with hedges, you wait for the trend to dictate your move.

But that’s not realistic. Eventually the trend forms, and one side is being added to, the other stays fairly flat. When it reverses and profit is taken, a little bone is thrown out to the other side.

But it’s not just a little bone, a little token – this is the essential opportunity to realise some profit but more importantly release the pressure.

Often when in a range, the price will move up and we will add more, but the it falls back again, we’re forced on to a smaller position acknowledging this. Again it moves up in the range to the top, we only have the profit on these smaller bits. But it could be a sneaky peak – we often profit from these reversals switch straight to smalls.

So every time it goes back it should switch back to smalls, isn’t that what we’re doing now?

It seems reasonable if we reason that smalls don’t need to be written off – they’re too small. You just always have to kick it back.

It’s just you will arrive at the new slab. The small slab as only one position is ever profitted on replaced with a bigger slab so it’s only when the range breaks that bigger numbers get put down.

But it allows for a head of steam to build up. If it reverses but retests, the big number will sit there, the smalls we will collect the pennies from, but every time it pushed up, a bigger position is building to breakthrough. If it reverses, we clear out of the money and that equals things up.

What happens is out position sizings are slowly creeping up, but now they are dynamic.

We know a small position on the backfoot is likely to remain around $3-500, but that your standard positions are $500+ and a building slab will be going up by over a grand but not more than $1500, that’s where we want to take this in the next few weeks, slowly edging it up.

It could take a month to get to a grand it could take all year, that’s what we have to be prepared for.

If we edge it up to smalls being $500+, standard being $1k+ and slabs growing $2k+ a round, how much different are we than where we were? Well check check it out.

Now you’ll see life without the huge carry costs and crushing avalanches, but each dollar over $1500 becomes a hard fight for a lucky break. You still have to write off stuff, and it eats up your money.

If I had $2k a week I could be saving for my next project and I’d be happy with that.

We need to be patient.

It’s hard to know what the future will bring.

Averaging 30 weeks making $1k and then 20 weeks making $1.5k you’d make $60k in a year.

You would have tripled your cash now and tripled your game. So you could say you’ve tripled your average.

I mean by the time you’re back at $50k where is your head gonna be? It’s not the $50k that it was.

You’re going to be wanting to hit $1500 a week at least.

But don’t you see this is such a component of your previous failure?

In 2017 you would not accept that you could not earn $2k or even $1500 in a week and after months, with the pressure building up so much from the house issue, you began to take unacceptable risks.

But the turkish problem had already formed. You can’t squarely blame one isolated thing, it’s just learning, it’s experience, it costs in pain and anguish.

Managing your risk is something you have learned the hard way and this was the point I was making in the last post about how dreaming of millions opened up so many possibilities – that it’s hard to have firm regrets about the trading, because it’s only realistic that the mistakes I’ve made would get made.

It is only realistic that I believed I could ramp up my game and not have it bite my ass in dnipro of all places in the world, I finally get to russia and that’s when my trading blew a tyre on the freeway.

I’ve learnt about hedging. I’ve learnt about carry costs. I’ve learnt about managing risk. I’ve learnt about trends.

I’ve learnt the hard way, I have lost . . . well I’m still down $20k all up. You better accept that and understand that before you rationalise the pain trading has put you through.

But one thing is for sure, when I’m back in the USSR, I’m am not going to be shitting myself over my trading like I was. Girls can smell your fear and that’s what I instantly understood about kiev, that if you had the confidence that money brings when you are in kiev, it would be like you fell in a well of pussy so deep they’d call off the search and it would become local custom to leave food for your ghost.

The girls smell money, that’s all part of the ukrainian hustle.

The point is well, I want to say that you were ambitious, and given the parameters of what you believed, you believed you could ramp and you were wrong.

I was able to get my house, and I was able to have my trip, but I fucked my trading up and I am lucky I only lost half my money and not all of it.

It is only natural that you would make mistakes and that you would have to learn by being punished severely, I have often reflected that my road in trading has taken me closer to success because I had the chance to learn by losing so much money, I may be $20k down but I’m only $20k down.

I can make it back.

But I want to get to drive home to the point- I made mistakes, I was ambitious, but I had to learn, and I was wrong. I was wrong to believe it was possible to ramp so quickly and to become frustrated when things didn’t pay off and begin to grow exponentially.

I am now able to see the timespan we are dealing with more correctly, and in appreciating that my estimations were so wildly optimistic, I can accept the timeline more realistically.

You simply can’t take a shortcut without opening yourself up to risks that given the system I work, inevitably become unmanageable, you can’t hedge without digging the hole deeper, and you must realise the loss.

It was always going to take 2 years to reach $2k, so you must accept that is the best outcome you can hope for and don’t aim your sights any higher, you’ll relax more.

You’ll remember again and again that if you’re trading and making $500 like you are right now in the streets of kiev, you are made.

Stop grasping, and let it flow. Stop angling for the $2k, for the $3k, don’t think about it it doesn’t matter.

Reading back here it says I don’t know why I should help anyone, but then I ended saying that I would, because it’s a fun game, it’s all a game.

But that’s what I mean, It’s just a game. Russian girls, great. Let’s have them here, but it doesn’t matter.

If you make a grand on your trading it doesn’t matter, you get a little darya, and you have money and you can travel and it’s all good and all the rest and the rest. What do you want? like a few hundred bucks so you can have a car and youtube stuff and some websites and even do a pop up store if you want, or maybe one russian girls comes over, like whenever, like whatever.

Asking why you would sacrifice this for land because you need it now is not the right angle.

The right angle is realising you never knew it would be like this – you were foolish to believe it would be so easy, but you can’t yourself for that, that’s experience.

You thought it would only take a few years, and you were right but you didn’t account for a couple of years of false starts and mistakes.

Realise now that what has happened is pretty unsurprising, the most surprising part is that you woke up before it was too late.

Sure you’d be higher now if you stayed the course BUT you would have learned nothing, learned nothing about dealing with defusing a nightmare, you would simply be coasting on the luck that the turkish found a bottom and if the long term trend continues and it breaks lower again, which is almost likely, you would have gained nothing either.

We now know $5k a week is a big deal and will take the appropriate amount of work, not this year, not next year and maybe the next but of course, $5k was a milestone because it’s basically the threshold between being well off and rich. $250k is what a baby lil CEO gets paid, $5k is something to work for long term.

It’s a big goal, it’s a lot of money, it’s our chance to recognise this and see that it really isn’t a game, or some sophomore hustle, this is for real now, be happy in your certainty you can make $1k.

But also understand this timeline and why you think these limits exist.

Because I’ve seen how hard it is to cross from $1k+ to $2k+ and it’s not screwy maths that won’t scale, it’s my bias.

When you trade in $500 lots, even a big wave is not going to upset your shit, you are not likely to have more than $30k down, when it moves 5% it costs you – well you’ve seen our hedges, this is what we’re playing out right now – it will cost you two or three grand across a currency where once it would have been $10k and you would have turned the bus around a move that big it would be $1-2k.

Well 3x that and you’re talking about a move of $6k being a distinct possibility you have to have on board, right now, that’s not acceptable. Half that, I could begin to entertain, a $3k hit is absolute threshold of acceptable risk for me right now. Which says me you expand the risk by half as much. x1.5

That would put me about a grand. That’s what I am seeing you can expand to a grand a week, but not much more, you need to at least get to $35k to justify risking up to a $4k move, and so doubling your shit. That’s where we might begin to hope we can hit $1500 soon enough and this could be in a few months.

Getting to $30k proves we’re making money, and we’re virtually there. Getting to $40k proves we can support ourselves on $100 a week while overseas – our kurb money, we can draw down $200.

At $50k we are totally ready to take on a $6k hit again, we can be a brave boy, and we can angle to try to hit $2k a week. You would be back expecting $3k ranges each week.

You expect bad weeks, but not 3 in a row, that’s bad news. time to realise loss and square the hedges, to lockdown.

We are hoping to hit $50k maybe in july. This is optimistic.

The question what do we need to hit? And we only need to hit $1k like by xmas.

You only need $200 for your trip, and thats $350 plus $2k for extras for darya and helsinki which isn’t cheap. You might only be able to do 2 weekends in helsinki but it’s fun.

$500 a week will give you $200 to download. You’re already there pretty much, you’ll hit $1k and that’s good. And you’ll hit $2k.

And you’ll want to buy your section. you’ll have $50k from trading, maybe $30k from your savings and your trees. Hopefully $100k, we can borrow $100k against the house. We have $200k.

It’s a lot of work.

I’ve found bareland stuff on the otherside of hamilton for under $200k. Not wild about it.

We want to lease the land for 10 years and put something transportable on there.

$50 a week for 5 years. I put sustainable house stuff on there.

Just the interest from $200k is $200 a week. You don’t want to buy.

Okay now this is a real idea. Here we go again.

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