Jason Bond Changes to Small Account Journey

Email from Jason Bond regarding his changes to improve the Jason Bond Small Account Journey

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Hey,

Of the 293 trades I’ve made, across multiple challenges, 35 were losses.

An 88% win rate.

The current challenge is pacing at a 92% win rate or 113 wins out of 123 trades.

4% higher than the average.

And with that the balance ballooned from $2,000 to $38,554 in 4 months.

Sure, the 52 trade win streak I’m on helps.

But it’s more than that. I made a few major changes a few months ago and it’s really improving my growth curve.

When Journey first started the plan was to allocate 100% of the balance into every new trade. Growth was fast. But any big mistake and right back to the drawing board. For example, here’s the very first Journey in January 2023. It only took me 9 trades to get to $8,377 or 319% growth. And 1 trade to lose it all.

Adjustment #1

After 3 attempts with max allocation I’d won 16 out of 19 trades but gone nowhere. I decided to put 5 benchmarks in place. Instead of 100% of the balance into every new trade I would only do 100% up to $5,000 and then start to diversify.

The balance did very well and climbed above $30,000 under this structure or benchmark 4, which said 7 trades on at a time. There was no balance between bear calls and bull puts when the QQQ was extended. $30,000 spread across 6 bull puts on tech stocks isn’t much different than $30,000 on 1 tech stock. Sure enough the market dipped and I got caught with my hand in the cookie jar. This was a painful lesson which resulted in a quick draw down at which point I decided to take profit.

These were the benchmarks:

• $2K-$5K 100% allocation to get the account up in value fast
• $5K-$10K 50% allocation (2 $2.5K-$5K trades open at a time)
• $10K-$20K 25% allocation (4 $2.5K-$5K trades open at a time)
• $20K-$100K 15% allocation (7 $3K-$15K trades open at a time)
• $100K+ is 10% allocation (10 $10K trades open at a time)

August 4th was the day of the drawdown and what you’ll notice is I ignored clear warnings the market was weakening. I attribute this to being on a hot streak and getting complacent. And at the time I didn’t have clear guidelines on what to watch for in the QQQ. Not only is the Nasdaq below the 10-day EMA (red line) but it was struggling at the Keltner Channel mean too. I had all $30,000 allocated in bull puts on tech stocks on a day like that?! Again, $30,000 spread across 6 bull puts on tech stocks isn’t much different than $30,000 on 1 tech stock, right?!

Now if you’re a member, I want you to compare that to how I traded the most recent weakness in March around the Keltner Channel mean.

We noticed the breakout surges getting smaller. We noticed lower highs. We noticed weakness around the 10-day EMA and Keltner Channel mean. As we noticed all of that we traded smaller positions, more bear calls and money on the sidelines in cash. If you’re not a member I can tell you I was very conservative the last few weeks headed into the interest-rate decision.

Adjustment #2

The major change here is that we now monitor QQQ breakout thrusts, time at 3 ATR to determine reversion to mean, 10-day EMA support when reversion happens and Keltner Channel mean support as our uptrend line in the sand. This combination is VERY powerful and helps us transition from bullish to bearish trades or larger holdings in cash.

Adjustment #3

The next big change, and this one is very important, is my stop loss strategy. I used to reference 4 possible stop levels (10-day EMA, sold strike, middle of spread, and bought strike) but the problem is I would find myself justifying holding a losing through through all 4 of those levels. Defiant rationalization is toxic to your goal of being profitable.

For example. The stock price would be above the 10-day EMA. I would enter a bull put below the 10-day EMA. The 10 would break so I’d move my stop to the sold strike. Sold strike would break and I’d move it to the middle of the spread. And again, moving it to the bought strike. Until I was down -200%+ and at max loss. I found the lines to be too subjective. Then one day I listened to Taiku’s lesson on stop loss strategy and he taught 100% of the credit. The way he explained it really made sense to me and my losses have been under 100% since which is a significant improvement and a major reason the balance is surging higher.

Adjustment #4

I think this is the biggest change I made and it was a result of all the others. I dropped the 5 benchmarks completely. I keep my allocation pretty consistent, regardless of the balance growth. So now that I’m above $38,000, I’m still doing $2,000 trades. This helps in a lot of ways. First, we know there’s a random distribution between wins and losses.

By keeping the allocation consistent when I do run into losses they don’t wipe out a larger percentage of previous wins. Think about it this way. As the balance balloons, if I allocate $10,000 / trade, but catch a losing streak, it would only take a few poorly managed trades to wipe out months of good trading. Technically this is what happened to me in point 2 above. If I did want to ramp allocation it should be gradual so that the random distribution of wins and losses averages out over time.

This is what I covered in this morning’s lesson. I’ll have it online Sunday and it’ll be called Data Dump.

After analyzing all of my challenges I believe what I wrote above is why I’m on a 52 trade win streak and the balance is thriving.

Subscribe to Journey here.

NEW MEMBER BONUS: join Journey before Monday and get the SAJ Accelerator ($497 value) 100% FREE!

(Already a Journey member? Add the SAJ Accelerator here.)

The Accelerator is meant to speed up the learning curve for those doing the new $2,000 balance I’m starting April 1.

Eat, sleep & trade!

Jason Bond